From the fireworks of Federal Reserve Chairman Jay Powell’s congressional testimony to an attempt to break the 10-year yield threshold, what a great week this has been for the housing market.Then on Friday we got solid hiring and labor force growth data and a surprising setback Silicon Valley BankLet’s look at these one by one.
Federal Reserve Story
beginning, federal reserve Chairman Jerome Powell, like most Fed members these days, didn’t have the best week as he seemed uncertain about what was going on with the economy and the path of future rate hikes here.
I was able to spend 3 days on this topic.However, to focus on today’s job report, I decided to listen and read this podcast This article To understand my frustration with the Federal Reserve’s message. My whole stance that the Fed would not pivot was based on their logic as to why they were raising rates so quickly.
10 year yield
Those of you who have been reading our weekly housing market tracker article already know that I have discussed key technical levels and bottom end ranges for 10 year yields and where they are this week. It would take something big to reach the yield peak call forecast of . 4.25%.
A snapshot of today’s 10-year yield at this second:
Some of my friends who were outraged this week that the 10-year yield didn’t rise even though the Fed’s interest rate has been rising for a long time, said I’m sorry. I’m here. But as I emphasized recently, this is not his 1970s baby. “Marriage at first sight” For a while I quarreled with the short end of the bond market.
Bank crackdown?
of news or Silicon Valley Bank Mary Daly, president and CEO of the Federal Reserve Bank of San Francisco, must have been shocked by the failure because it happened in her district.We expect some emergency Fed meetings over the weekend to see if other banks are at risk. Read the statement FDIC About bank transfer here.
work, work, works
from BLS:According to the US Bureau of Labor Statistics, total nonfarm payrolls increased by 311,000 in February, while the unemployment rate rose to 3.6%. Notable employment growth was seen in the leisure and hospitality, retail, government and healthcare sectors. Employment fell in information, transportation and warehousing.
How come unemployment is rising and so many job postings are being printed? Well, this happens sometimes as the workforce grows. This is the Federal Reserve’s dream of accelerating labor force growth.
The Federal Reserve wants wage growth to slow further and believes an increase in the labor force will help them.
What the Federal Reserve wants is for the year-over-year wage growth data to drop significantly and stay there. Americans are getting excessive wage increases and workers have power over their bosses, according to the Federal Reserve. This is unacceptable in America.
Employment rates have risen significantly from the prime working age group and are now approaching pre-pandemic highs.
Total civilian workforce level is over 166 a millionso there are people who can fill jobs and reach the level of job growth they needed before COVID-19.
For those who haven’t followed me during my COVID-19 recovery, I made some key points about the labor market.
- The COVID-19 Recovery Model was created on April 7, 2020. This model predicts that the US recovery will take place in his 2020, retired December 9, 2020.
- It said the labor market will fully recover by September 2022. That means it will take some time to regain all the jobs lost to COVID-19. During this process, I predicted that the number of job openings would reach 10 million. In 2021, even when the work report was disappointing, i doubled on my premise.
- Currently we are still in work replenishment mode depending on how long this expansion lasts.
Before COVID-19 hit, total employment was 152,371,000. At the time, we were averaging over 200,000 jobs per month and had an improving workforce in early 2020. So let’s assume there was no COVID-19, no recession, and job growth continued. It’s not a wild assumption that he should have 159 million jobs out of 158 million instead of the 155.35 million jobs reported today.
As long as the economy is expanding, the closer it gets to catching up, the slower the employment data will increase. Workers have been laid off recently in several sectors of the economy. Below is a breakdown of jobs gained and jobs lost in Friday’s report. With recent news, it’s no surprise that jobs are being lost in the information and warehousing sector.
Here is a breakdown of the unemployment rate in relation to education level above 25:
- High school graduate or below: 5.8% (previously 4.5%)
- High school graduates with no university experience: 3.6%
- College or Associate’s Degree: 3.2% (previously 2.9%)
- Bachelor’s degree or above: 2.0%
It’s been a crazy week — a record week for sure. With lots of employment and labor data, banks going bankrupt, and the Fed chairman having his two days in Congress, we can take a break over the weekend. In Monday’s podcast, I’ll go into more detail about my thoughts this week. But who knows what the news will be by Monday morning?
In Monday’s Home Market Tracker, we discuss why the bond market is still stuck in the 10-year yield channel. The question is, what will the Fed do now when market watchers think it will keep raising rates until it breaks something?
