One of the biggest potential movers for mortgage rates is the monthly jobs report.
However, the one released today was a little weird because it arrived on a Tuesday in the third week of the month.
It’s supposed to arrive on the first Friday of the month, but the government shutdown derailed all that.
That shutdown also explains why despite the highest unemployment in four plus years, mortgage rates barely improved.
They came down a couple ticks today, but are mostly flat, despite the worst unemployment rate since the pandemic.
Latest Jobs Report Carries Less Weight Than Normal
The combined October/November jobs report released today showed more of what we’ve seen lately.
Fewer jobs created and higher unemployment, but it wasn’t alarming enough to really move mortgage rates.
In addition, the November number was actually a beat because it came in at 64,000 versus a median forecast of 45,000 jobs added.
But the October numbers were a negative 105,000, and the September jobs tally got revised down to 108,000 and the August numbers to an even worse negative 26,000.
At the same time, the unemployment rate rose to 4.6% from 4.4%, the highest since September 2021.
In other words, not a great report, which would normally put pressure on stocks and send investors into safe-haven assets like bonds.
That would result in higher bond prices and lower bond yields, which would translate to lower mortgage rates.
However, this report is a funky one considering it combined old data from October, was released late, and encompassed the largest government shutdown in U.S. history.
As such, it’s kind of being brushed off as not all that important.
All Eyes on the December Jobs Report Now
If you recall, or perhaps missed, Fed Chair Jerome Powell warned us last week that this combined jobs report wouldn’t mean a whole lot.
In fact, he said “that the data may be distorted” and “we’re going to have to look at it carefully and with a somewhat skeptical eye.”
So it’s no real surprise. And given it was kind of a mixed bag with a beat for November, you can understand why it had limited impact.
Moving ahead, those watching mortgage rates should instead focus on the December jobs report, which is due out January 9th, 2026.
That report will be based on normal data collection and will feature a standard release date.
It should also give us a better idea as to where the labor market is going post government shutdown and after a full year with a new President at the helm.
Will Labor Continue to Weaken in 2026?
The jobs reports prior to the shutdown were pretty bad, with big misses, negative prints, and downward revisions.
If that continues, or worsens in 2026, you can expect lower mortgage rates, all else equal.
Remember, mortgage rates tend to fall when there’s economic weakness, and rise when the economy is hot.
That means you kind of have to root for an economic slowdown if you want mortgage rates to improve from here.
Just be careful what you wish for as there can be a point where too much of a bad thing is counterproductive.
To summarize, many still feel that the labor market is good enough for the Fed to mostly stand pat where they are, with just two additional rate cuts penciled for 2026.
That supports the thought that mortgage rates will be mostly flat in 2026 as well relative to current levels.
Of course, anything can happen and with mortgage rates, it’s always wise to expect the unexpected.
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