Why yields rose even after soft jobs report, dovish Fed

Name: Why yields rose even after soft jobs report, dovish Fed
Uploaded: 2026-10-05T08:00:41+00:00
Duration: 24 min 31 s
Channel: HousingWire

00:11Welcome, everyone. I'm joined today by lead analyst Logan Modashami to talk about the jobs

00:16report and the reaction we saw from the 10-year yield. Before we dive in, here are the top five

00:21articles on HousingWire.com. First is FHFA set to order Fannie Freddie to accept two bureau credit

00:28reports, followed by GSE's grant policy waiver for lenders not ready for UAD 3.6 mandate. Then we

00:35have even a missed jobs report and the Fed talking devish aren't keeping yields lower, which we're

00:40talking about today. And reporting for our mortgage banking summit on FHFA's unified LLPA grid raises

00:46investor concern. Finally, we have MLS data is more valuable than ever. The industry has to decide how

00:53to protect it. Okay, we're ready to dive in and we are in person in our studio. Logan, this is

00:58really

00:59fun. Yes, this is a whole nother level. And we have so much to talk about today. Yes, first, I

01:04just want

01:05to give some rocks. You know, we got ranked number 11 in the country. You know, we're already an award

01:10winning podcast. And she's got to put up with me. Imagine the last four years trying to manage the

01:17chart daddy, which is not fun, but jobs Friday. And, you know, when I when I write the jobs article,

01:25it's it's I take all the data right after and I kind of told Sarah, I said, let's just wait

01:30a little

01:30bit. Because I am not quite convinced on the 10 year yield. And as the you saw the 10 year

01:37yield go

01:38from 5.34% on Thursday morning. Then we had the Fed Vice President Jefferson come out and basically

01:46sound dovish trying to push back on the October rate hike. Lori Logan, who's one of the hawks

01:53from early on from many, many months ago, she even came out and some people deemed it to be hawkish.

02:00But I mean, we've been talking about this in the podcast for months. The Fed hawks want all their

02:05rate cuts back from last year, they felt like they were forced to cut rates because of labor data and

02:10they didn't really want to but they want to get those back. So even Lori Logan, in some ways was

02:16somewhat dovish because all she's talked about is we just need a 50 basis point increase and then

02:21we'll be fine. The market was really priced for more rate hikes going into 2027. So we've had in a

02:29sense, at least how I look at it, two very two dovish Fed members trying to talk back aggressive

02:36rate hiking and even one of the hawks just saying, hey, listen, we're going to we're going to stop

02:41right there. And then the jobs report came out and then the jobs report misestimates. But really,

02:49you know, the break evens is so low. Does that move the needle with the Fed? I don't think it

02:55does.

02:55The unemployment rate technically went from like 4.14 percent to 4.18 percent. Not a big move either

03:02way. Government jobs were the big loser of the month. And the 10 year yield went all the way down

03:09to 5.17. And then throughout the day, kept on shooting up, went flat for the day. And then

03:15last time I checked was about four bases up. So we're at 5.29. And Sarah and I have talked

03:24about

03:24this six weeks ago. We thought that until the midterms is over, we might see some crazy things.

03:31And we have seen some crazy things, of course. I've only seen the bond market react positively

03:39in a good way when the conflict was over and the MOU deal was signed and oil went all the

03:46way down to

03:4668. And because of that, they were completely fine with taking yields lower. And now the longer this

03:55conflict has gone on, the more embedded the inflation is in the Federal Reserve's mind.

04:00And the bond market just doesn't care. It doesn't care even that we've gotten a lot more oil into the

04:07straight of performance. We are elevated with still a risk of escalation. And after that MOU deal broke

04:14off, bond yields started to go up higher. We were fighting with Iran during market hours. That was

04:22not what we've been accustomed to. And then when President Trump said, hey, listen, nothing's

04:27going to get done until after the midterm. So I'm going with that game plan from six weeks ago until

04:33I actually see how the bond market reacts when there's a deal done. Because I think the bond market

04:38is like, homie, we don't trust anyone. And we're not falling for those headlines anymore. So I think

04:44the bond market has wised up to what's going on. And maybe that could explain today's

04:51actions because it's Friday. We're going into weekends. It's October. It's different. This

04:56month is going to be different. You either close out with a deal or you have a big question mark,

05:03especially if Trump doesn't get what he wants and the Republicans keep the House and the Senate,

05:09you might get into a much bigger conflict after that. And who knows? That's an X variable that we're

05:17all trying to. So I'm trying to make sense of today's 10-year yield movement.

05:21Well, I appreciate that because I think when we see a jobs mess, I think there was a collective like,

05:26okay, maybe. And we started to see things tick down. I was like, yay, that's great.

05:31And it just went right back up. And it's hard to know. Are they looking at inflation? They looking

05:36at jobs? They looking at the conflict? They're ignoring all of it. What is happening?

05:39You know, when you have two dovish Fed voters, John Williams of New York Fed and Richardson came

05:47out. And then you have Lori Logan, who could have, she could have easily said, hey, listen,

05:53we might need to do more than take back the insurance rate. She could have said that and

05:58the market was already pricing that. She didn't. That's a clue to me that the Fed is starting to

06:04worry about the long end of the bond market. And technically, that's like their third mandate.

06:09They're supposed to keep that a little bit calm. That didn't work. I mean, it did work on Thursday.

06:16Now we're Friday morning. So you had the jobs and then the yields just shot right back. Now,

06:20of course, it isn't higher. But I think this is a wake-up call for everyone, for the White House,

06:30for JD Vance, for bond traders, for mortgage and real estate people. What usually happens for this

06:40month might not work until we get some closure out there. So whatever the polling is on inflation

06:48or higher mortgage rates. I know Kevin Hassett came out this morning, the economic chief head of

06:56the economic council for the White House. So we want lower mortgage rates. Whatever is going on

07:01right now, it's not working in trying to calm the bond market down, either from the Federal Reserve

07:07side. So the Fed governors need to have a team meeting on this. If you have issues with the bond

07:14market, then there needs to be a little bit more of an aggressive message. If you don't have an issue

07:20with the bond market, I'm sure Beth Hammock was probably mad. She was probably pissed off that

07:26the 10-year yield was lower. She's going to write something on LinkedIn about it right now, about

07:29why did the 10-year yield go lower? What's going on here? But if you don't care, then you just

07:35let

07:36the market do its thing. But I thought there was a clear message to try to calm things down.

07:41Now, by the end of Friday afternoon, by that comes, who knows where the 10-year yield would be.

07:48But I'm cautious of this month, as we were cautious weeks ago, that when the president says

07:56this is going to end after the midterms, you don't know how this is going to turn out. Even with

08:03more

08:04oil flowing in the strait. Of course, we're going to get a CPI report two weeks from now. So we're

08:10going

08:10to have a kind of a mild week. But clearly, this is a very interesting jobs week. And taking all

08:19the

08:19data and the aggregate total, I think still some people are confused about the labor market.

08:25Okay. Well, when you're saying this, what it reminds me of is just like, okay,

08:30oh, I have a movie. I have a movie analogy. It reminds me of the bus in Speed, right? Where

08:36it's

08:36just like out of control. It's right. There's no brakes. They've been disabled. You've got people

08:40on the bus. How are we doing this? Because it's like, if the White House really can't do anything

08:44about it, if the Fed can't really do anything about it, it's like, where are the guardrails that,

08:49I mean, can it just go anywhere? Are you Sandra Bullock in Speed?

08:53Oh, I will. Yes. I would love that. Okay. All right. All right. I got to be Keanu Reeves then.

08:58Okay. And what was it? Pop quiz hotshot. I think that's Dennis Hopper. I think he was the evil guy

09:06on Speed. So pop quiz hotshot, labor data, only 29,000 jobs. What have we tried to stress here?

09:14When you have labor force growth slowly moving lower and lower, you can have four to five reports

09:20be negative in the year and not have the unemployment rate go up really. And we as a

09:29country, and I don't know who wants to take the leadership. I mean, I could talk about it all I

09:34want. Nobody's going to care, but somebody in the White House or an economic is going to have to

09:39explain to everyone in America, if population growth is declining and slowing, the end of the job

09:46boom in America is over, right? So this is why you can have very, very low job prints and the

09:53unemployment rate go, this is what Japan is, right? Everybody mocks Japan's economy because they're

09:58dying. If you do not have population growth, you have limits. Now for a while there, ICE wasn't

10:05arresting people as much. And some economists were talking about, well, hey, listen, the jobs data is

10:11getting better because we're not deporting as many people. And now we're deporting more again.

10:17I can't make that. I just don't have enough evidence to use that analogy. My things are

10:22different. First year of a trade war and then the second year get better. But my break evens are 78

10:28,000

10:29because I use a little bit of a different diffusion rate and population control adjustments. But the

10:33Federal Reserve, I mean, a really smart economist that I know is a friend who worked with the White House

10:39before, he's got the break evens at zero. Oh my gosh.

10:43You know, because population growth is the slowest it might be ever. I mean, going back a very,

10:51very long time. Now, I like to average the population growth data, smooth it out a little

10:55bit because we had some really big numbers before this big slowdown. So you average it out, my break

11:01evens are going to be naturally higher than everyone else's. But if we have zero jobs needed for break

11:07evens, the country needs to know this, right? Because it's confusing to everyone. No matter

11:12how much I say break evens are a big thing. The first initial reaction is over 29,000 jobs. The

11:18Fed

11:18is behind the curve and everything. This is not working out to what people think because the

11:24unemployment rate literally went from four point, you know, one, four percent to four point. It's

11:29nothing. It's not material in a big way. And jobless claims are still low. So somebody has to take

11:35the mantle. If nobody's going to do it, I'm going to have to do it then, you know, and talk

11:39about break evens more. But I understand the initial frustration of people in the real estate

11:46and mortgage industry looking at these low job numbers. And the break evens used to be

11:51like 240,000 to 240,000. I mean, not that long ago. Just a few years ago. And it's come

11:57down

11:58a lot. So you could have a very, very low unemployment rate for a very long time. And

12:04how many years have I said this? You and I have known each other. I'm more afraid of not having

12:10enough workers than AI taking all the jobs. And early this year, and by the way, for those people

12:15who say, oh, the bond market is afraid of $40 trillion of debt. Homies, y'all say this when yields

12:23are rising. And then when the 10-year yield is back down to 4%, like it has every single

12:28year, you know, what happened to that 40? It's, to me, the Federal Reserve got hawkish. They

12:33ran hawkish. We have a conflict still going on. Inflation is above target. Nominal growth

12:38is still, I mean, we can have a nominal growth print of like 7%, 8% in Q3. These things

12:43are

12:44moving around. I can make a really big case of 10-year yield on a historical basis is still

12:48lower than it should be based on that. So we have a lot of confusing things. And I wish

12:54more prominent people than myself are talking about this in more of the national sense so people can

13:01understand why these low job numbers doesn't budge the Federal Reserve at all.

13:06So let's talk about that for just a second, because, you know, you talked about Japan. We've

13:10talked about other countries where they're facing this real population decline, which in a, you know,

13:18do you feel like, you know, so say something happens in the midterms, or even in two years,

13:22if we had a change of administration, is it something where you can sort of flip the switch

13:28on that immigration? And because a lot of these other countries don't have any, they don't have a

13:34history of immigration. They don't really like immigration. They, they, they're not set up that

13:38way. We, we are. I mean, we're a nation of immigrants. Is it something you can turn on and,

13:42and make that problem go away? Um, you, you could, I don't think we're in the political

13:48environment to do so. Uh, um, of course there's a difference between legal, uh, immigration and

13:56legal. I think you as, uh, as, as a country, you have to be mindful of the labor force growth

14:03and what Japan is doing is Japan is desperate for people. And I think that's, that's, that's

14:09understandable for them. I don't think we are in the dire situation that, uh, some people are

14:15talking about just because we have a lot of millennials, we have a lot of Gen Z and we

14:18have a lot of Gen A. Uh, so, uh, population growth slowing for this year. I like to average

14:23it out the last three years because it was, it was a little bit higher than normal, uh, the years

14:28before. Uh, but over time, man, if you, because the bait, what, what do we always say? You know,

14:36tombstone economics, people, none of us, what was the, what was the famous saying I had for years?

14:42No country has a Dorian Gray label market. If you do not know who Dorian Gray is, shame on you.

14:47You also like to say, um, everyone's going to die. We're all going to die. We're all going to die.

14:51We're all going to die. Yes. Yes. A lot of people don't like that when I say it, but it's

14:55true. I'm

14:56like, you're not Dorian Gray, are you? And some people go, who's Dorian Gray? I was like,

15:01read books for that. You know, in any case, why do I always say no country has a Dorian Gray

15:06labor

15:06market? Because we, nature, nature, nature wins. We age, we leave the workforce, we die. We need to

15:14be replaced. Right? So, um, uh, I'm not in the dire camp like some other people are, are, are saying,

15:21but if this is going to be the case going out, boy, we better have robots being able to do

15:27some work,

15:28you know, 30, 40 years from now, like I've seen in some of these presentations, uh, because the baby

15:33boomers are leaving, they're going to die off. We're going to replace them, but we are a growing

15:37economy, right? You know, this is why so many people want AI and robots to win because they can

15:43give us growth without needing the labor market. But then it's like, people go, well, I don't have

15:47a job. Where do I get the money? There's all these crazy things about what's going to happen over the

15:51next 50 or 60 years. But one thing is for sure, the world is getting older and a lot of

15:56countries,

15:57you know, China, Japan, and Europe, their prime age population has been declining for years,

16:02right? So their economies aren't like shattering or collapsing with China is to a degree. Uh,

16:08we still have a good replacement workforce. So I'm not in that dire camp yet. We still have over 164

16:14million people working all together. And we still have a healthy number of replacement workers and

16:18consumers, but it's something to think about. So, uh, uh, it can't be somebody like me talking about

16:24this all the time and somebody have the white house or somebody has to start explaining. So

16:28people understand why the federal reserve is like, Hey guys, we don't see the labor market breaking,

16:33but people see these low job numbers and they go, well, whatever this happens in the past,

16:37you know, the economy goes into recession. It's not working in work in 2022, three, four, five,

16:42or six, because jobless claims aren't breaking corporate profits are. So one of the things we talked

16:47about in the, uh, housing wire, uh, uh, uh, uh, mortgage banking summit is that think of it as

16:53corporate profits, pricing power, corporations are using that pricing power to their advantage

16:59wage growth, which hit 3% today, right? So what does the federal reserve think if the federal reserve

17:05could get wage growth under 3% and productivity is running at 1%, that's the best way for them to

17:11get

17:11to 2% inflation. So they're happy about that, but Americans are, Hey, my, my costs have gone up.

17:16Now my wage growth is here. Real wages are down, you know, so there's a lot, but, um, we, we,

17:24we have to have an honest conversation about this because if it is true that we are just not growing

17:30anymore, uh, and we're, we're, we're, we're, we're basing all of our growth on AI and robots,

17:36you know, there's, there's limits to that kind of thing. And, uh, um, it's go this month,

17:43Sarah, this month, if we could just get past through this month and something gets done,

17:49that'll be a positive. But, uh, uh, like I said, in our, uh, presentation yesterday, this is the

17:54most complicated year, uh, I've seen in a while, you know, COVID was, Hey, listen, it's nobody was

18:01working. And then everybody started working again, you know, uh, 2022, the fed went on an aggressive

18:06fed rate hike cycle, and they kept doing until the fed funds rate got above the growth rate of

18:11inflation, at least a 2%. They wanted to get restrictive. Okay. We get that 2008 was a

18:16credit crisis that we get that, but this year, this year is, is crazy. You know, this year is

18:22very complicated. You can't just make up stuff and throw stuff in the air. So I think, uh, uh, again,

18:28if you guys don't want to listen to the chart, daddy, make sure you listen to people who are not

18:32ideologues, left-wing or right-wing or stock traders or special middle-aged middle-aged

18:37management podcast, stock traders, they're the worst. Um, uh, and just kind of have somebody

18:42even keel to just try to explain all this because it is very confusing to the normal person, which I

18:48totally get. So, um, you mentioned the mortgage banking summit, which we had, uh, this week,

18:53you did a great job, great presentation. Um, what I heard a lot, um, in conversations with you,

19:00and with other people, um, was that confusion over a recession, but isn't this leading to a

19:07recession? If we're seeing this on jobs, isn't that a recession? And then people would think,

19:11oh, rates are going to go lower because, you know, we're in a recession. We, I heard a lot of

19:14variations of that yesterday. And I think that it's important that you're like, don't, it's a

19:19different conversation. It's, we have not had recessionary data really since 2006 and seven.

19:28I mean, I'm dead honest when I say that, you know, we, we, you know, we have, everyone has

19:33their own recession models, but I, you know, I need residential construction workers to lose their

19:37job. I need manufacturing workers to lose their jobs at the same time. I need to see industrial

19:42production and investment and consumption, real wages start to fall. Um, it can't be corporate

19:48profits are rising and taking it higher. So, um, jobless claims are just too low. Economic growth

19:56is nominal growth is over 6%. These are not recessionary data lines, but, uh, it's confusing,

20:02right? We also live in a day of social media where a bunch of, pardon my language, do I even

20:08say

20:08pardon my language? We have a bunch of jackasses just running around the internet and just basically

20:13every day, this is the end. There's a foreclosure crisis. This is, uh, the, the, we're, we're going to

20:19get hyperinflation. And we're, I mean, we, we just, we're surrounded by a bunch of jackasses who

20:24confuse people. I'm glad that people share me these videos. I can't watch more than 10 seconds

20:29of it. It's such trash. It's like people sell their souls to Faust for getting nothing. You ain't

20:34going to get nothing for this stuff. This is how your adult life is. Your kids are going to look

20:37at

20:37you. My dad was a jackass doom pointing his adult life until he's dead in the afterlife, man.

20:42But when a recession happens, there are certain things that need to occur. We have not actually

20:48had them since 2006 and seven. Uh, um, and we, COVID was a recession. That was a sharp, I mean,

20:55go back in January, February of 2020 data. Industrial production was up. Retail sales were up. PMI data

21:01was up. Housing broke out. New homes, all these things, none of them were recessionary. We had a

21:06bunch of clowns in 2019 talking about a recession too. So you have to be careful who you listen to.

21:11If you don't want to listen to me, I trust me. I get it. I'm not for everyone. Uh, but

21:15there are

21:16other people out there who are sane and not ideologues and not in the business of drawing

21:21attention to themselves for clicks. Well, we, we talked a lot about, uh, the jobs report. Um,

21:28understandably anything else in our few minutes left that you want to talk about for this weekend?

21:32It's all, it's always gives me some stress when we do a Friday podcast, because we have no idea

21:38what's going to happen between now and Monday morning when this comes out. So the last thing

21:42is now you've, now you've had a few fed members talk about the housing market where, uh, the smirk

21:47of Austin Goolsby said, we're going to disproportionately hurt sectors that aren't

21:52causing the inflation. He's talking about housing. Uh, Neil Kashkari said, you know, the housing market

21:56is already strained and it's going to be disproportionately hit. Uh, Kevin Warsh talked

22:01about, you know, uh, always, you know, uh, uh, uh, policy isn't restrictive enough, obviously

22:07for the economy not to expand, but it is for the housing market. Uh, you're seeing some

22:13acknowledgement that, uh, uh, the housing market is going to be the, the sector gets disproportionately

22:18hit here. I, one of the things I talked about, you know, the federal reserve's mandate does

22:23not actually work with the existing home sales report, but we've had many periods, many cycles,

22:28you know, uh, home sales peaked in 2005 during the housing bubble. It took 2006, seven, and eight

22:34took years before it crashed. We didn't grow sales really until like 2014. So we've had periods of

22:42times where we have, you know, uh, many years, four or five, six years before sales start to grow.

22:48Uh, again, we saw that in 1986 to 1991, you know, uh, home sales boomed, uh, and prices boomed during

22:54the late seventies and they had that big crash, uh, uh, in sales. Uh, sometimes it takes, sometimes

23:00it always usually takes a few years to get things going, but here, at least there's an acknowledgement

23:07that this is not so much housing related. It's not like rents are taking off. It's not like home

23:12prices are taking off, but the federal reserve's tools really impacts this sector. Their tools don't

23:19really like, you can't just hike and get more oil out. You can't hike. And then all of a sudden

23:24Trump takes the trade war out, you know, but if you did take those two variables out of the equation,

23:30then at least that's something where the federal reserve says, okay, these two things are things

23:35we don't like, and we're going to stay hawkish until they get resolved. Uh, uh, so, you know, we,

23:40we always like to talk about the fed, but this is our choice. This is what, you know, uh, we,

23:46we're, we're doing this, so we have to pay the consequences for it.

23:51Logan, thank you so much for walking us through this, uh, very confusing Friday. And, um, like

23:56you said, it's October. We're going to buckle up for the whole month. We will be here.

24:00We got to think about scary Halloween outfits. Like what, what am I like, you know, the, my,

24:05my favorite ones, if the U S dollar got to one 15, I was going to be the U S

24:09dollar for Halloween,

24:10but, uh, I'll think of something up for our next podcast on what I'll be for Halloween.

24:14Okay. You guys have to look forward to that. You have to watch it on YouTube.

24:18Logan, really. Thank you so much. We'll talk soon.

24:20Pleasure.

Why yields rose even after soft jobs report, dovish Fed

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