Weekend Talking Points - 'No Hike, No Cut'

Jobs growth remained weak, but the market is still focused on the potential inflationary impact of the US/Iran conflict. While mortgage rates have eased recently, they’re still nearly half a percentage point higher than they were pre-war.

Before we begin. On February 27, average 30-year mortgage rates were reported at 5.99% by Mortgage News Daily. The US/Iran conflict started on February 28. These dates are important because: 1) oil prices, US treasury yields, and mortgage rates moved up dramatically in March, so 2) any economic and real estate data for January and February is pre-war.

Some recent relief for mortgage rates. A combination of weak consumer sentiment (University of Michigan) and comments from Federal Reserve Chairman Jerome Powell eased market concerns that the Fed might actually RAISE rates at their April 29 meeting. Average 30-yr mortgage rates dropped from 6.64% on 3/27 to 6.45% on 4/1.

Job openings at pre-COVID levels. In February, total job openings fell 5% (both month-over-month and year-over-year) to 6.882 million. The hiring rate dropped to 3.1%, which is the lowest figure we’ve seen since April 2020 (when COVID was exploding) and January 2011. The quits rate remained very low at 1.9%.

TP: You’ve been reading about this low-hire / low-fire environment for more than a year now. But what does it really signal? A lack of confidence. For employers, the outlook isn’t strong enough to increase staffing and/or they’re seeing opportunities to replace humans with AI. For employees, there aren’t enough attractive offers to jump ship, so they’re just staying put.

ADP employment report was a slight beat. Private employers added 62,000 jobs in March, above Wall Street expectations of around 40,000. But, as I’ve said before, anything less than 100K is basically no job growth for a nation our size. Moreover, most of the growth came from one sector: education/health services. ADP itself warned in a previous report that many of these jobs are low-paying.

Case-Shiller index keeps rising. The Case-Shiller national home price index rose 0.23% MoM in January 2026. That makes six consecutive months of MoM growth, which annualizes at a meaningful +3.3% YoY. As a reminder, the national index rose just 1.1% in 2025.

TP: What impact has the war in Iran had on home price appreciation? We’ll know in two months!

Bond and Mortgage Market

The rise in oil prices, and the attendant risk of a reacceleration in inflation, had the markets worried that Fed members might vote to RAISE rates at the next FOMC meeting.

But over the last few days, we’ve had Federal Reserve Chairman Jerome Powell say that the Fed can and should “look through” potentially short-term oil price movements. We also had a very weak University of Michigan consumer sentiment report, as well as lackluster job openings (JOLTs) and jobs growth (ADP) data.

No rate hike? That’s reassuring. But the market is still not pricing in any rate cuts in 2026 — despite consistently weak jobs growth data.

Note: The Fed Funds Rate policy range is currently 3.50–3.75%. The probabilities below come from the CME Group website and are implied from the Fed Funds Rate futures market.

• April 29 FOMC Meeting: 97% probability that the Fed Funds Rate target range is kept at 3.50–3.75% (was 94% last week). And…a 3% probability (was 6% a week ago) that the Fed will raise rates 25 basis points.
• June 17 FOMC Meeting: 94% probability that the Fed Funds Rate will be kept at 3.50–3.75% (unchanged from last week). So, no rate cut at either the April or June meeting.
• No rate cut in 2026? If I look way out to the last FOMC meeting of the year (Dec 9), the market is pricing in a 73% probability that the Fed Funds Rate will be exactly where it is today. In other words, the market continues to price in NO rate cuts for the entirety of 2026. There is only a 22% probability that rates will be 25 basis points below current.

They Said It

“Overall hiring is steady, but job growth continues to favor certain industries, including health care. In March, this solid performance was accompanied by a boost in pay gains for job-changers.” — Nela Richardson, ADP’s Chief Economist

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