02/08/2025
Despite Apparent Volatility, Rates Have Been Surprisingly Calm
You might expect higher market volatility after so many headlines. Yet, the market focuses on hard data.
Tariff news hasn't gone unnoticed, but the bigger picture hasn't changed. Traders wait to see what actually gets implemented and how it plays out. Until then, the approach remains straightforward: watch the same economic data that always matters most.
Above all, the monthly jobs report (the "Employment Situation") holds the spotlight. The latest numbers show that new job creation is slightly below expectations. Usually, that would help rates, but not this time.
The jobs report includes many details, and the unemployment rate stands out. It moved lower despite an uptick in the labor force. Usually, a bigger labor force would raise unemployment.
This matters because many analysts have watched unemployment since July 2024, when it hinted at recession-like trends. Historically, that kind of move keeps climbing. Instead, it eased back down.
Other parts of the report were upbeat, but rates didn't swing wildly. After several weeks of gradual declines fueled by friendly inflation data, they might level off. You can see this in mortgage rates and Treasury yields, which tend to move together.
