Market Update- Rates, ADP and BLS jobs reports, Fed rate cuts, and OPEC oil cuts

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Starting off, some good news. We saw interest rates drop about a quarter of a percent since last week. They were last week at 7.1%, now coming in at 6.85%. So great news there. As far as mortgage tip this week, a little difference in automated underwriting versus manual underwriting. So you might hear if somebody on their preapproval letter says, oh, this is a good one, we've already got automated underwriting approval. What does that actually mean? Really just means that the loan officer has run the numbers on the application through a computer program, and then it's come back saying, yep, based on these numbers, things look good. And now an underwriter, all they have to do is verify that the documents support the numbers entered by the loan officer. But the trouble is that's only as good as the loan officer Because if they're not calculating income correctly, or they're putting numbers into the application that aren't supported by documents, if they even have documents, it doesn't mean anything. And alternatively, if they put in those numbers, they run the software, rather than getting an approve rating, they might get a refer. And a refer means that it's a risky enough situation, it's going to be up to the discretion of an underwriter to determine if that loan can actually be approved. They're going to apply more strict requirements on it and more strict underwriting guidelines for the documents required. So if you do run into a situation where someone's getting manual underwriting, just know you might be in for a little bit bumpier of a road. So if there's a possibility where they go through automated underwriting, you can ask them, did you get an approve through automated underwriting or did you get a refer? And if you got a refer, almost always on those ones, personally, I prefer to have an underwriter review it. Before giving a preapproval to make sure we know it's going to be good. Because again, it's going to be up to discretion at that point. Next up, ADP and BLS jobs report came in this week here. ADP showing that there was a job— 140,000 jobs created for the month of February, which is a little bit below the 150,000 that was expected. January was also slightly revised higher from 107,000 to 111,000. And the last part of this component, they reported job Income for job stayers was up 5.1%, a decrease from the 5.2% that we saw last report. And this is year over year. But this interesting one is for job changers, those who've left their job. We saw an increase in income of 7.6%. And this is a big improvement from the 7.2% we saw in the last report. And this is the first time we saw an increase from one month to the next over the last 19 months. We've just seen a steady decline on those. Next up here, the BLS jobs report. This one came in quite a bit higher than expected. 275,000 jobs created for the month of February versus 200,000 that were expected. But there is a catch. You see, one of the things that BLS has gotten a lot of flak for is these massive revisions to the numbers in the 1 to 2 months that follow. And this month was no exception. We see January's numbers were revised lower by 124,000, and then December was also lowered by 43,000. These revisions after the initial headline numbers have come out. And so when combined, there was 167,000 negative revisions, which definitely tampered the $75,000 higher headline number we got and also set expectations that this number is probably going to be revised lower in the future as well. So again, BLS losing a lot of trust and integrity in the market because we are seeing these continued negative revisions after the fact. So the headline numbers not being taken with as much validity. And the household survey component, it's its own part, its own number as far as jobs go within the BLS. And that actually came in— the household survey showed 184,000 job losses for the same month. The labor force also increased 150,000. So as a result, this was where the unemployment rate comes from. We saw unemployment rate increase from 3.7% to 3.9%. And that's one of the reasons why this next component, Jerome Powell, was testifying to Senate this week and might have gotten a little sneak preview of that unemployment rate because he was saying that he's gaining increasing confidence in being able to cut rates or start their easing cycle for their bond purchases. Now, this is a change in the verbiage from what we've seen where they're continually waiting for more information. And so now he's saying he's gaining more confidence and getting closer and closer to cutting again, likely as a result of that higher unemployment number that we saw this week. And lastly here, not going in our favor, something to keep a watch on is that OPEC, the oil conglomerate, they are continuing to extend their oil production cuts through Q2, which could push oil prices higher. As a lot of us are already seeing gas prices at the pump have been going up. And so if they continue trending higher, that could be another inflationary factor for us, which of course isn't going to help us with CPI and PCE inflation numbers, which the Fed are looking very, very closely at right now. Oil prices are trading for around $80 a barrel, and continuing these production cuts as we get into summer months, more driving, not going to be great for us. So we'll continue to keep an eye on that. As always, hope you have a fantastic weekend. Let me know if there's anything I can help with. We'll see you next time. Take care.