Oil prices are surging and mortgage rates are roughly flat so far today. It has been a crazy day in the bond market: the 10-year yield first went lower after the jobs report, then Trump posted that the goal in Iran is “ultimate surrender,” which sent the 10-year yield higher with oil prices over $90. But as I am writing this, the 10-year yield is lower for the day! How’s your week going?
Let’s take a look at the jobs data today to see what happened.
From BLS: Total nonfarm payroll employment edged down by 92,000 in February, and the unemployment rate changed little at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment in health care decreased, reflecting strike activity. Employment in information and federal government continued to trend down.
On the HousingWire Daily podcast yesterday, before this report, I discussed how the jobs report might be a bit quirky, so I wasn’t sure how seriously the market would take it. Well, today the report showed we lost 92,000 jobs and had negative revisions — so that’s beyond quirky, even with the health-care strike impacting this report to a degree.
The honest truth here is that the labor market has been softening since the start of 2025, and the Fed won’t pivot away from neutral policy to accommodative until jobless claims rise. We can’t have an economy being held up by just two job sectors, as we have seen over the last year. Now, even those sectors have lost jobs and so the report was negative.
With inflation still above 2% and the unemployment rate below 5%, the hawks at the Federal Reserve really do need to see the labor market breaking before committing to the next step. This has been my premise since the end of 2022.
Construction labor is soft outside of AI spending
Of course, we all know about the money being added to the economy to build AI data centers, but when we look at other sectors of construction labor or remodeling, it’s not great.
The key labor sector that I like to monitor hasn’t been growing for some time now but hasn’t broken yet, as it has in previous cycles.
Conclusion
This has been a crazy week and it’s also been a crazy day with the 10-year yield.
The 10-year started the day at 4.18%, dropped to 4.11%, rose back to 4.18%, and now, as I write this, is back to 4.12%. The oil story is getting worse: once oil prices broke over $82, they had the potential to go much higher and that’s what has happened today, getting as high as $92. As I am writing this, the WTI is at $90, but the 10-year yield is at 4.12%, as labor is still winning over inflation for rates.
Clearly, however, if the conflict with Iran hadn’t happened, we would have lower mortgage rates today after this jobs report came in negative. In any case, this first week of March reminds me of an entire season of the show 24.
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