Mortgage rates have reached a new low for 2025, despite the Consumer Price Index (CPI) inflation being well above the target and showing a stronger increase in the core goods component. Why are mortgage rates at 6.27%? Jobless claims experienced a significant spike today, which suggests that the labor market may not be as strong as Federal Reserve Chair Jerome Powell and Cleveland Fed President Beth Hammack have been suggesting.
I do want to note that I don’t take a one-week spike in jobless claims too seriously, and this particular spike was notably large, primarily coming from Texas. However, the more significant story is that the 10-year yield hit 4% this morning, reflecting that labor over inflation has been consistent in 2025. In today’s episode of the HousingWire Daily podcast, I discuss the two major reasons behind these trends in 2025.
Jobless claims data shocker
Because everyone has been reading about softer labor data lately, bond traders have itchy fingers, and they totally did not care about the CPI inflation report at all — all they saw was a massive spike in the jobless claims data and they started buying bonds.
The state of Texas was the primary contributor to the recent surge in jobless claims. Typically, when there is a significant spike in this data, it is often an anomaly, and we can expect it to decrease in the following week — unless we are experiencing a job-loss recession.
Continuing claims, which refer to individuals applying for unemployment benefits over an extended period, are at a three-year high. This indicates that the labor market has softened considerably, although it has not collapsed yet.
Since 2022, I have said we shouldn’t be discussing a recession until we see jobless claims head toward a four-week moving average of 323,000. If we examine economic history and adjust jobless claims to the civilian labor force, then this number would flag serious recession fears. We have seen some fluctuations in the four-week moving average, but never a consistent move toward 323,000 and today the four-week moving average is at 240,500. We always like moving averages with weekly data because sometimes the data can get wild week to week.
Conclusion
We have now been through jobs week, inflation week and the last jobless claims print before the next Fed meeting. Get the popcorn ready folks, it’s going to be one of the most drama-filled Fed meetings in recent history. Until then, enjoy the lower mortgage rates.
English (US) · 