Broker Check

Mosaic Asset Partners - It's All About The Employment Data This Week

March 08, 2024

Federal Reserve Chairman Powell spoke at length this week on Capital Hill. He reiterated that policymakers “remain attentive to the risks that inflation poses and don’t want to ease up too quickly.” In his remarks he also commented on the risks of lowering rates too quickly and being forced to pull back if inflation creeps back. In the same breath he also acknowledged the risks of waiting too long to begin the lowering process. Limbo land for sure. The question-and-answer period following these prepared remarks always sparks more interest as economists look for more insight. “We think because of the strength in the economy and the strength in the labor market and the progress we’ve made, we can approach that step carefully and thoughtfully and with greater confidence,” he said. “When we reach that confidence, the expectation is we will do so sometime this year. We can then begin dialing back that restriction on our policy.” The soft landing we have all been hoping for still seems more than reasonable and generally our markets are responding favorably.

Further evidence of things moving in the right direction was presented via the February jobs data released this morning. U.S. job growth totaled 275,000 in February, higher than the expectations of 225,000, while the unemployment rate moved higher to 3.9% from 3.7%. The previous numbers for December and January were also revised slightly lower, further indicating that things are indeed slowing down to some degree. This is exactly the type of economic indicator that the Federal Reserve is looking for in terms of pivoting to lower interest rates on the horizon. From the things we have seen and read this week, the expectations for that pivot to begin are beginning to point towards the June Fed meeting. While the next scheduled meeting is set for March 19th-20th, the likelihood of any significant policy change still seems highly unlikely right now.

It's hard to believe, but the spring housing market is rapidly descending upon us. Although the weather this winter has generally been much wetter and cooler than normal, the daffodils and tulips are already popping here in the Mid-Atlantic region. Spring hasn’t officially sprung yet, but the spring housing market already appears to be on the move despite stubbornly higher mortgage rates. Although inventories remain tight, there was a surge in mortgage demand this past week by 11% (week-over-week comparison). With the average 30-year mortgage rate sitting around the 7% level, buyers are not shying away from diving in headfirst. With the amount of cash that remains parked on the sidelines, cash deals and multiple contract offerings are the norm again. Buyers are simply refusing to wait for a move toward lower interest rates and are likely banking on the idea of refinancing in 12-24 months. Honestly, it’s not a bad strategy given the lack of a broader housing inventory.

Steven and I had the opportunity to speak this week with a group of young residents and fellows preparing for their next career moves. We always welcome the opportunity to spread the word when it comes to “Financial Planning and Wellness.” The earlier you start the better! I realize the older I get the more I relish the opportunity to spout off a good dad joke, especially one that might target a specific audience. I held my tongue with this group but decided I would pass along the fun in this weekly update. Here it goes.

“Dogs can’t operate an MRI machine, but catscan……..”

Have a wonderful weekend!

https://www.cnbc.com/2024/03/06/weekly-mortgage-demand-surges-11percent-as-more-homes-hit-the-spring-market.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

https://www.cnbc.com/2024/03/06/powell-reinforces-position-that-the-fed-is-not-ready-to-start-cutting-interest-rates.html

https://www.cnbc.com/2024/03/08/jobs-report-february-2024-us-job-growth-totaled-275000.html

Christopher E. Wasson, CFP®

President

Mosaic Asset Partners, LLC

1122 Kenilworth Drive, Suite 310

Towson, MD  21204

410.821.0089         fax 410.821.5993

MosaicAssetPartners.com  

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS.  Investor Disclosures: https://www.kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.