This Week In A Nutshell
Mortgage rates are flat after the Fed cut rates last week, as expected, while also communicating that it’ll likely be the last cut for a while. Rates could fluctuate this week, with fresh jobs and inflation data for the first time since the government shutdown.
Upcoming Attractions
We’re in for a big week, with two headline reports. The unusual schedule is due to the government shutdown, which delayed November data collection and release.
October/November Jobs Report (Tuesday): The jobs report is key for driving Fed rate cut decisions right now. Payroll employment is expected to come in around 10k for October and 50k for November, a slowdown from September’s 119k. The unemployment rate is expected to tick up slightly from 4.44% in September to 4.5% in November. If this data is worse than expected, the Fed may continue rate cuts despite last week’s commentary.
November CPI Report (Thursday): Core inflation is expected to come in 0.2% monthly (3.0% annually), which is down slightly from the September reading. October data collection was cancelled due to the government shutdown. Tariffs continue to keep inflation elevated, but the government shutdown-induced delays in November data collection is expected to result in slightly lower measured inflation, with retailers discounting prices toward the end of the month. An unexpected uptick in inflation could keep the Fed in a holding pattern even if the jobs data deteriorates.
October Retail Sales (Tuesday): Delayed from original mid-November release. It’s expected to show a small rebound from the prior month
November NAR Existing Home Sales (Friday): Redfin expects this to come in at 4.0m seasonally adjusted at an annual rate (-2% YoY), and 300,000 not seasonally adjusted monthly rate (-5% YoY).
Fed Speak: A number of speaking engagements are on the calendar, including Fed Governor Miran twice on Monday, New York Fed President Williams on Monday and Wednesday, and Fed Governor Waller on Wednesday.
Last Week’s Highlights
Fed meeting: The meeting proceeded largely as expected, with a 25 bps rate cut, lots of disagreement among the committee, and a forecast of no more cuts in the near future. With the rate cut already priced in ahead of time, mortgage rates stayed fairly flat afterwards. The Fed also announced some asset purchases a little earlier than expected which led to some worrying about a “mini-QE,” referring to their financial crisis and COVID-era programs designed to push down rates. However, this was purely financial plumbing, meant to prevent problems in the money market down the road so the Fed can continue to keep their policy rate where they intend it to be.
JOLTs data: Job openings increased to 7.7 million in September and 7.7 million in October, more than expected, with the largest increases in retail trade and wholesale trade. The layoff rate increased to 1.2% with an increase in state and local government layoffs.
Diving a Little Deeper: Last week, Fed Chair Powell said the Fed is estimating that official jobs numbers are overstating job growth by 60k per month. What does that mean? Let’s dive in.
The Bureau of Labor Statistics (BLS) monthly job creation numbers are based on a survey of about 630,000 firms. Once a year, the BLS revises this data when it incorporates data from the Quarterly Census of Employment and Wages (QCEW), which is a much more accurate source of employment data since it covers about 95% of all jobs across over 12 million firms. However, this data is not available as quickly. So the BLS threads the needle by using the more timely monthly survey data first and then updating using the more comprehensive data later.
The monthly survey can be inaccurate for two reasons. One, some firms go out of business and new firms are created all the time. The survey is unable to keep up with these changes, so the BLS uses what is called a “birth-death model” to guess at these effects. And two, over the last 10 years, the response rate to the monthly survey has dropped from about 90% to about 70%, and the firms that continue to respond may be the ones less likely to be hiring.
In early September, the BLS announced a preliminary estimate that when monthly job growth is revised in early 2026, it will show about a million fewer jobs were created between April 2024 and March 2025 than previously reported. That is a huge revision and it was also widely anticipated by private sector forecasters who had been examining the data carefully. Chair Powell was referring to this effect when he stated that Federal Reserve Board economists are estimating that monthly job creation may actually be about 60k less than what the BLS is currently reporting.
Why can’t the BLS update its methodology if the Fed and private sector economists have a more accurate view of underlying job creation? The BLS is actually updating its methods all the time for both the birth-death model and to try to get a higher response rate. But as the official agency in charge of such vital statistics, they have to move slowly and carefully. What is important is that they are very transparent about what they are doing so it’s possible for users of the data to predict systematic deviations.
Notable Redfin Housing Market Report
The share of Redfin users clicking into the climate-risk section of home listings nearly doubled after the 2025 Los Angeles wildfires started burning. The same effect took hold in Florida during hurricane season. In both instances, the bump in user engagement was short-lived.
