{"id":13622,"date":"2025-01-13T17:54:32","date_gmt":"2025-01-13T17:54:32","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13622"},"modified":"2025-01-13T17:54:33","modified_gmt":"2025-01-13T17:54:33","slug":"fed-may-pause-rate-cuts-mortgage-rate-relief-job-market-a-mixed-bag","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/fed-may-pause-rate-cuts-mortgage-rate-relief-job-market-a-mixed-bag\/","title":{"rendered":"Fed May Pause Rate Cuts, Mortgage Rate Relief, Job Market A Mixed Bag"},"content":{"rendered":"\n<p>The start of the year is the perfect time to focus on strategies that matter most. This week\u2019s <em>Steady Investor<\/em> highlights three key themes that are shaping the current market:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Fed signals a pause in rate cuts<\/li>\n\n\n\n<li>The hidden force driving mortgage rates lower<\/li>\n\n\n\n<li>Unemployed office workers face challenges finding new jobs<\/li>\n<\/ul>\n\n\n\n<p><strong>The Fed Signals a Coming \u2018Pause\u2019 in Rate Cuts \u2013 <\/strong>Many economic forecasters and large banks anticipate 50 basis-points or more of rate cuts in 2025. The Fed wants everyone to know those cuts are not a given. In parsing the minutes from the December 17-18 policy meeting, it was clear that a majority of Fed officials saw the December 25 basis-point cut as appropriate given year-over-year progress on inflation, a notable softening in the labor market (via fewer hires, not increased layoffs), and the overarching desire to bring the benchmark fed funds back toward the so-called \u201cneutral rate.\u201d&nbsp; According to the minutes, however, the rate cut was still a close call, and \u201c<em>participants indicated that the committee was at or near the point at which it would be appropriate to slow the pace of policy easing<\/em>.\u201d On one hand, the Fed is showing signs of concern that inflationary pressures may be more \u201csticky\u201d than anticipated, especially given the slight reacceleration seen in Q4 2024. On top of that, some Fed officials appear to be adopting a \u2018wait-and-see\u2019 posture regarding the potential impact of higher tariffs and mass deportations, both of which could arguably reignite inflationary pressures. On the other hand, however, recent data in the labor market suggests that the pace of hiring slowed in the second half of last year, and the Bureau of Labor Statistics reports that more than 1.6 million jobless workers had been job hunting for at least six months, a 50% increase since the end of 2022.&nbsp;The Fed has also made clear that if the labor market softened further, they would arguably lean towards further rate cuts to support employment and not worry as much about inflation being 50 basis points or so above target. All told, the Fed\u2019s official projections now pencil two 25 basis-point rate cuts in 2025, but the timing of those cuts\u2014and whether they come at all\u2014is far less clear.<sup>1<\/sup><\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\">How to Turn Volatility into a Strategic Advantage<\/a><\/u><\/strong><br>\u00a0<br>Market volatility can feel unsettling, but it\u2019s a natural part of investing\u2014and often, it presents opportunities. While the ups and downs can be tough to navigate, volatility offers a unique chance to refine your strategy and potentially capitalize on market shifts.<br>\u00a0<br>Our free guide, <em>\u201c<\/em><strong><em><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\"><u>Using Market Volatility to Your Advantage<\/u><\/a><\/em><\/strong><em><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\">2<\/a><\/sup>,\u201d<\/em> reveals proven strategies to help you not only weather the storm, but thrive during it.<\/p>\n\n\n\n<p>In this guide, you\u2019ll discover:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>How market volatility can \u201cshake up\u201d complacent investors<\/li>\n\n\n\n<li>Potential bargains that may be uncovered through turbulence<\/li>\n\n\n\n<li>Why volatility may help prevent overheating and market \u201cbubbles\u201d<\/li>\n\n\n\n<li>What history shows us about opportunities for steady investors in turbulent markets<\/li>\n\n\n\n<li>Plus, more ways you may be able to benefit from a volatile market<\/li>\n<\/ul>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\">Download Our Guide, \u201cUsing Market Volatility to Your Advantage\u201d<sup>2<\/sup><\/a><\/u><\/strong><\/p>\n\n\n\n<p><strong>Could Mortgage Rates See Some Relief in 2025? <\/strong>Would-be homebuyers were feeling hopeful last year when the Fed was telegraphing rate cuts and the 30-year fixed mortgage rate started marching from 7% to 6%. Then rates reversed course. Towards the end of 2024, long-term Treasury yields shot higher, ostensibly driven by market expectations for higher growth in the new year but also the potential for higher inflation and deficits tied to trade and fiscal policy. Mortgage rates tend to track long-duration Treasury bond yields (see chart below), which meant upward pressure was applied across the board.<sup>3<\/sup><\/p>\n\n\n\n<p><strong><em>30-year Fixed Mortgage Rates (blue line) and 30-year U.S. Treasury Bond Yields (green line)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"347\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-2-1024x347.png\" alt=\"\" class=\"wp-image-13623\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-2-1024x347.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-2-300x102.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-2-768x260.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-2.png 1320w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Source: Federal Reserve Bank of St. Louis<sup>4<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p>There are a few factors that could potentially bring down long-duration Treasury yields (and mortgage yields down with them). The first is better-than-expected inflation data in the coming months and quarters. The second is a clear end to the Fed\u2019s rate cutting cycle, which could increase demand for longer-duration Treasuries since institutional buyers (banks, mutual funds, ETFs) would feel more confident about yield volatility subsiding. These two factors combined could also help close the gap between 30-year fixed mortgage rates and 30-year Treasury bond yields, which stood at approximately 1.4% as of the end of last year. This gap is unusually high relative to history (see chart above).<\/p>\n\n\n\n<p><strong>Layoffs are Low, But So is the Probability of Finding a New Job \u2013 <\/strong>As mentioned above in comments regarding the jobs market, many Americans are having a hard time finding work. According to the Bureau of Labor Statistics, of the 7 million unemployed Americans today, 1.6 million have been looking for a job for at least six months. While many types of jobs in services and healthcare remain relatively abundant, it is jobs in high-paying, white-collar roles like technology and law that are increasingly hard to come by. This trend may point to something of a plateau in labor market tightness, which may also signal an abating of wage pressures.<sup>5<\/sup><\/p>\n\n\n\n<p><strong>Make Market Volatility Work for You This Year &#8211; <\/strong>Volatility isn\u2019t something to fear\u2014it\u2019s something to leverage. When approached with the right strategy, market fluctuations can present unique opportunities to refine your investment approach and unlock new potential.<\/p>\n\n\n\n<p>Today, we\u2019re offering our guide, <em>\u201c<\/em><strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_01_13&amp;content=volatility_can_be_good_guide\">Using Market Volatility to Your Advantage<sup>6<\/sup><\/a><\/u><\/em><\/strong><em>,\u201d<\/em> packed with insights from decades of experience. Learn how to harness market volatility to enhance your strategy and potentially generate stronger returns.<\/p>\n\n\n\n<p>You\u2019ll get our ideas on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>How market volatility can \u201cshake up\u201d complacent investors<\/li>\n\n\n\n<li>Potential bargains that may be uncovered through turbulence<\/li>\n\n\n\n<li>Why volatility may help prevent overheating and market \u201cbubbles\u201d<\/li>\n\n\n\n<li>What history shows us about opportunities for steady investors in turbulent markets<\/li>\n\n\n\n<li>Plus, more ways you may be able to benefit from a volatile market<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, download this free guide today by clicking on the link below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Though many anticipate rate cuts this year the Fed is signaling that they are not definite, factors that could lower mortgage rates in 2025, layoffs are low but so are new job openings.<\/p>\n","protected":false},"author":3,"featured_media":13584,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-13622","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13622","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13622"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13622\/revisions"}],"predecessor-version":[{"id":13624,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13622\/revisions\/13624"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13584"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}