The
U.S.

jobs
report
for
September
is
set
to
be
released
Friday,
and
it
could
prove
to
be
a
pivotal
moment
for
the


Federal
Reserve
as
it
determines
how
to
shape
monetary
policy
moving
forward.

The
past
three
months
have
included

underwhelming
data
in
the
labor
market.
In
August,
nonfarm
payrolls
expanded
by
142,000
positions
—
below
the

Dow
Jones
consensus
forecast
of
161,000.
Meanwhile,
job
gains
for
June
and
July
were
revised
downward
to
118,000
and
89,000,
respectively.

The
consensus
estimate
for
September
is
150,000
new
jobs
created,
up
5.6%
from
the
preliminary
August
numbers.
A
figure
that
exceeds
this
estimate
could
signal
temporary
strengthening
of
the
labor
market
and
cause
Fed
policymakers
to
more
carefully
contemplate
future
interest
rate
cuts
following
last
month’s

50-basis-point
(bps)
decrease.

Conversely,
an
exceptionally
weak
print
that
includes
a
higher

unemployment
rate
could
cause
the
Fed
to
move
more
rapidly
in
lowering
the
federal
funds
rate.
Benchmark
rates
currently
sit
at
a
range
of
4.75%
to
5%,
and
barring
an
emergency
session,
they
won’t
move
again
until
the
next
regular
meeting
of
the

Federal
Open
Market
Committee
(FOMC)
in
early
November.

What
does
this
mean
for
mortgage
rates?
According
to
Joe
Ellison,
vice
president
of
capital
markets
at

Veterans
United
Home
Loans,
it’s
important
to
not
have
tunnel
vision
as
rates
are
unlikely
to
drop
much
in
the
short
term.

“While
the
size
of
the
Fed’s
cut
(in
September)
was
the
big
headline,
the
real
focus
should
be
on
the
long-term
rate
path,”
Ellison
said
in
a
statement.
“Right
now,
the
data
dependency
of
the
Fed
is
the
key
driver
of
mortgage
rates.
As
the
labor
market
weakens,
we
may
see
more
rate
cuts
this
year
and
next,
which
could
eventually
bring
down
mortgage
costs.”

After
months
of
consistent
declines,
mortgage
rates
have
stagnated
since
the
Fed’s
decision.

While
the
50-bps
cut
was
welcomed,
lenders
and
investors
had
already
priced
it
into
the
cost
of
loans.
On
Tuesday,


HousingWire‘s
Mortgage
Rates
Center
showed
that
30-year
fixed
rates
for
conforming
loans
averaged
6.25%,
exactly
the
same
as

a
week
ago,
while
the
15-year
conforming
average
of
5.59%
had
barely
budged.

Ellison
explained
that
a
variety
of
economic
data,
interest
rate
spreads
and
the
bond
market
will
influence
the
direction
of
mortgage
rates
in
both
the
short
and
long
term.
The
spread
between
the
30-year
mortgage
rate
and
the
10-year
Treasury
yield
continues
to
narrow,
but
as
HousingWire
Lead
Analyst
Logan
Mohtashami

noted
this
week,
“we
still
have
some
runway
left
to
return
to
historical
norms.” 

Ellison
said
that
bond
market
liquidity
has
been
low
for
more
than
two
years,
which
has
driven
mortgage
spreads
higher.
But
more
buyers
have
returned
to
the
mortgage-backed
securities
(MBS)
market
of
late,

sparking
more
options
from
sellers.
If
this
activity
continues,
it
could
offset
the
MBS
tapering
by
the
Fed
and
make
mortgages
more
affordable.

In
a
speech
given
Monday
in
Nashville,
Fed
Chair
Jerome
Powell
said
that
policymakers
have
“growing
confidence”
that
their
decisions
are
leading
to
better
outcomes
in
the
Fed’s
dual
mandate
of
maximum
employment
and
stable
consumer
prices.

“Looking
forward,
if
the
economy
evolves
broadly
as
expected,
policy
will
move
over
time
toward
a
more
neutral
stance,”
Powell
said.
“But
we
are
not
on
any
preset
course.
The
risks
are
two-sided,
and
we
will
continue
to
make
our
decisions
meeting
by
meeting.

“As
we
consider
additional
policy
adjustments,
we
will
carefully
assess
incoming
data,
the
evolving
outlook,
and
the
balance
of
risks.
Overall,
the
economy
is
in
solid
shape;
we
intend
to
use
our
tools
to
keep
it
there.”

With

demand
for
refinances
recently
moving
to
its
highest
level
in
nearly
two
years,
according
to

Optimal
Blue
data,
more
lenders
are
likely
to
shift
their
lead-generation
and
recapture
strategies
in
this
direction.
One
example
is

United
Wholesale
Mortgage
(UWM),
which
recently
announced
that
it
would
use
artificial
intelligence
to
send

pre-validated
refi
offers
to
customers.

“Right
now,
30-year
fixed
rates
are
in
the
5s
for
consumers,”
UWM
president
and
CEO

Mat
Ishbia
said
in
a


YouTube
post
on
Tuesday.
“The
opportunity
is
there
right
now
and
we
expect
the
Fed
to
cut
rates
even
more.
How
much
more
will
rates
drop?
I
don’t
know,
but
rates
don’t
need
to
go
much
further.
Refis
are
here
and
the
refi
boom
is
coming.
The
next
15
months
for
the
mortgage
industry
look
very,
very
promising.”

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