There was an insane amount of economic news this week. It was an inflation and jobs week and none of it was good. But there is no time to recover because next week – next week we’ve got an election boys and girls. Will it be market moving? Or has the market already reacted?
The bond market has decided Trump will be our next president. How do we know? Well let me back up to 2016, when the markets were caught very off guard by DJT’s victory. There was a complete blood bath in the bond market sending interest rates through the roof to their highest point in the previous 12 months. His election wiped out about $1 trillion from global bond markets as investors prepared for higher inflation and higher national debt.
We have seen the same thing happen over the past week.
As the markets prepared for Trump to return to the White House, the data that came in this week pointed to a stronger economy. We got jobs numbers. New unemployment claims released earlier this week were hopeful but then the big BLS jobs number this morning was off by 100k from market expectations. We only saw 12,000 jobs added. Unemployment stayed steady at 4.1%. I know you want to talk about revisions. The big August jobs number was cut in half. To be honest, I think the market should be done with this report. It is too unreliable!
Inflation readings were a little spooky yesterday on Halloween. Year-over-year readings on the Personal Consumption Expenditures indicated that inflation decreased from 2.3% to 2.1% which is remarkably close to the Fed’s two percent target. However, core inflation did not budge and seems stuck at 2.7%.
The only good news is that we have a good shot at improvement come Tuesday.
If Trump wins, we should not experience the pain we did in 2016 because the markets have already built that in. If Harris wins, that would be good for bonds anyways since she is the less inflationary candidate, and we know – inflation is the economy of mortgage interest rates. If Tuesday does not bring a clear winner, that uncertainty could bring investors back into the bond market and improve interest rates as well. Although even us mortgage lenders do not want to hope for that because it would be really bad for our country especially from a mental health standpoint.
Whatever happens on Tuesday, we will be breaking it down on Wednesday during Property Pursuits. We’ll go over what happens next in the bond market, how that will impact the real estate market and how buyers and sellers can prepare. It is going to be a good one.
Next week, this will all be over (hopefully!) and we can begin moving forward as a country. I don’t know about you, but I am ready for that. I’m also very excited about the Grand Opening of 18 on Lakeside! We are hosting a Fall Ball on Friday evening from 4-7pm with free food and drinks, tours of our show home, free Christmas photos for your team or clients or families and even activities for the kids. Let’s celebrate the end of election season and the beginning of the holiday season