Fed Cuts Rates Again Amid Cooling Job Market
The Federal Reserve lowered its benchmark rate by a quarter point to a range of 3.75%–4.00%, marking its second consecutive cut as it seeks to balance slowing job growth with persistent inflation. The move was widely anticipated, leading to gains in equities and Treasury yields immediately following the announcement.
While the cut could influence borrowing costs, the impact on consumer rates such as mortgages, HELOCs, and credit cards will vary, as many lenders had already priced in the decision. Economists suggest further rate cuts are possible if the labor market continues to soften and inflation trends lower.
Mortgage Rates Rise Despite Fed Action
Despite the Fed’s rate reduction, mortgage rates increased, with the average 30-year fixed rising 20 basis points to 6.33%, according to Mortgage News Daily. The bond market had already priced in the rate cut but reacted negatively to Fed Chair Jerome Powell’s cautious comments on the path of future policy moves.
Similar to September’s rate cut, markets adjusted expectations, driving higher Treasury yields and mortgage rates. Earlier declines in mortgage rates had fueled a 111% year-over-year jump in refinance applications, although home-purchase activity remained relatively stable.
Private-Sector Job Growth Rebounds
Preliminary data from ADP shows that private employers added an average of 14,250 jobs per week over the past four weeks, reversing September’s job losses. ADP introduced this rolling four-week average to provide a near real-time view of labor market conditions amid the temporary data gap caused by the government shutdown.
Chief Economist Nela Richardson noted the figures suggest roughly 55,000 total jobs added in the period, with final numbers to be confirmed in the next National Employment Report.
Looking Ahead
Investors will continue watching inflation data, labor trends, and Fed commentary for clues on the pace of future rate adjustments. As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.
