Mortgage Rates Drop to Near 1-Year Lows After Weak Jobs Report Boosts Fed Cut Expectations

Economic

Summary:

Mortgage rates have fallen sharply, with the average 30-year fixed rate hitting 6.28%, as weaker-than-expected jobs data raises the likelihood of more Federal Reserve rate cuts, bringing relief to potential homebuyers and refinancers....

Mortgage Rates Hit Fresh Lows Amid Weak Jobs Data

Mortgage rates have dropped to their lowest levels in nearly a year, with the 30-year fixed rate averaging 6.28% as of Monday, down from 6.5% just days earlier. This decline follows a weak jobs report for August, which saw only 22,000 jobs added, leading markets to anticipate further or larger interest rate cuts from the Federal Reserve.

The relationship between weak economic data and falling mortgage rates is straightforward: a slower job market dampens inflation concerns, which in turn increases the likelihood of the Fed easing its stance on interest rates. The sharp drop in 10-year Treasury yields, which often track mortgage rates, was directly triggered by this disappointing payroll data.

Anticipated Fed Rate Cuts Drive Market Expectations

The Fed’s upcoming meeting in mid-September has investors pricing in a higher probability of rate cuts, with some expecting a more significant 50 basis point reduction. This has already caused mortgage rates to ease, offering a window of opportunity for potential homebuyers and homeowners looking to refinance. However, this dynamic is highly dependent on upcoming data releases, such as revisions to job growth and inflation reports later this week. If inflation proves softer or the job revisions are more severe, mortgage rates could fall further, although there are also risks that rates could begin rising again.

Refinancing Surge Expected, But Caution Advised

At current rates, roughly 3.1 million mortgages are eligible for refinancing, the highest since October 2024. This is a sharp increase from just 2 million a few weeks ago. The potential savings from refinancing, particularly for those with existing mortgages in the high 6% range, makes this a favorable time for many to lock in lower rates.

However, loan officers like James Dinh caution against waiting for rates to drop further. “The mid-5s or the high-5s that’s when you should strike,” he advised, noting that last year’s rate cuts did not prevent mortgage rates from rising in the fall.

Outlook and Risks for Mortgage Markets

While the current drop in mortgage rates offers a temporary boost for homebuyers and refinancers, the outlook remains uncertain. If the Fed accelerates its rate-cutting cycle, mortgage rates could continue to decline. However, past experiences show that market conditions can change quickly, and borrowers should be mindful of the risks associated with timing the market.

Mortgage experts like Abdul Vanadze are advising clients to take advantage of current rate levels rather than gamble on further decreases, especially given the volatility of financial markets. For many, locking in rates now may be the best strategy to avoid potential future rate hikes.

The recent drop in mortgage rates provides a valuable opportunity for both homebuyers and those looking to refinance, especially given the increased likelihood of Fed rate cuts. While rates could continue to fall if economic data supports the case for further easing, prospective borrowers are advised to consider acting sooner rather than waiting, as the timing of the next move by the Fed remains uncertain.

Source: Reuters

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Gerik

Economic

Political Uncertainty Influences BOJ's Rate Hike Decisions

Following Prime Minister Ishiba’s resignation, the Bank of Japan may reconsider its plans for an interest rate hike in October. Analysts at Evercore ISI now forecast a delay until January 2026, citing potential political instability and the unknown direction of Japan’s future leadership. With the Liberal Democratic Party (LDP) scheduled to elect a new leader on October 4, the BOJ may prefer to delay its rate hike decision until after the new administration settles. The shift in political leadership adds a layer of uncertainty, making it challenging for the BOJ to raise rates in the middle of political turmoil.

The direct correlation here is clear: while the BOJ’s decision on rates is primarily driven by economic conditions, political stability plays a significant role in determining the timing of such a move. Without clarity on the new prime minister’s stance, the BOJ may choose to remain cautious and wait for more stable conditions.

Leadership Candidates and Monetary Policy

The leadership race within the LDP has added complexity to the BOJ's decision-making. Sanae Takaichi, a frontrunner who supports fiscal and monetary stimulus, has been critical of the BOJ's previous rate hikes, while Shinjiro Koizumi remains an unknown in terms of monetary policy. If Takaichi wins, her views on stimulus could pressure the BOJ to slow down its tightening policy.

A potential cause-and-effect relationship exists here: if Takaichi, who favors a reflationary approach, becomes prime minister, her influence could push the BOJ to adopt more dovish policies, impacting the timing and pace of rate hikes. However, the need for fiscal discipline could force her to reconsider aggressive monetary policies, particularly as inflation becomes a more pressing concern.

The Role of Inflation and Fiscal Discipline

Inflation has remained above the BOJ’s 2% target for three years, with broader price pressures emerging due to tight labor markets and rising wages. This creates a paradox for the BOJ: while waiting too long to raise rates could risk a loss of fiscal discipline, prematurely tightening could stifle economic growth.

The BOJ must strike a balance between supporting economic growth and addressing inflation. If political uncertainties prevent timely action, the central bank risks having to implement more drastic measures later, potentially triggering market concerns over Japan’s fiscal health. As inflation persists, especially in food and wages, the BOJ might need to move faster than previously anticipated to tame price pressures.

The political vacuum created by Ishiba’s resignation complicates the BOJ’s rate hike plans. While the central bank may delay its move, it faces growing risks from persistent inflation and market pressures. The BOJ will need to carefully navigate the political landscape and consider both short-term economic stability and long-term inflation control. Delaying too long may expose Japan to greater fiscal instability, while premature tightening could derail growth. The BOJ’s next steps will depend heavily on the trajectory of Japan’s leadership and the economic outlook in the months ahead.

Source: Reuters

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Winkelmann

Economic

Forex

Political

Key points:

● Scams involve illegal gambling, fraudulent investments

● Sanctioned entities linked to human trafficking and coercion

The United States imposed sanctions on cyber scam operators in Myanmar and Cambodia on Tuesday, a booming industry the U.S. says stole tens of billions from Americans last year, according to a Treasury Department statement.Criminal networks have trafficked hundreds of thousands of people into Southeast Asian scam compounds, especially along the Thai-Myanmar border, where they are forced into debt bondage and defrauding strangers online."Southeast Asia's cyber scam industry not only threatens the well-being and financial security of Americans, but also subjects thousands of people to modern slavery," Under Secretary of the Treasury for Terrorism and Financial Intelligence John K. Hurley said in the statement.

The Myanmar junta's spokesman did not immediately respond to Reuters' requests for comment, and neither did a Cambodia government spokesman.The scams include money laundering, illegal gambling and persuading victims to make fraudulent investments, and the operators tend to be people - usually foreigners - who have been trafficked and coerced into working in scam compounds.Sanctioned entities included nine companies and individuals in Shwe Kokko, a town in Karen State on the Thai border.The U.S. sanctions aim to choke off funds to the criminal networks, which have flourished in regions controlled both by militias and Myanmar's junta.

COERCION AND VIOLENCE

At Shwe Kokko, operators lured people from across the globe with deceptive offers, then confined, mistreated and coerced them into carrying out online fraud for criminal networks, the Treasury Department said.The criminals often use debt bondage, violence, and the threat of forced prostitution as part of their coercion tactics, it said.The department also sanctioned 10 entities in Cambodia, where centres run by Chinese criminal networks were focused on digital currency fraud. Some compounds in Cambodia resembled prisons, according to Amnesty International, which accused the country of ignoring the industry, allegations it denies.

Since a 2021 military coup, scam centres have expanded rapidly in Myanmar, spreading from militia-controlled areas into those under junta control, a report by the Australian Strategic Policy Institute said.Shwe Kokko was established in 2017 by Hong Kong–registered Yatai International Holdings Group and the Karen National Army, an armed group allied with Myanmar's military, according to the United States Institute of Peace. Yatai group is sanctioned and KNA has been previously sanctioned.

Source: TradingView

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Samantha Luan

Economic

Forex

Political

● Effective nuclear waste management is a critical global challenge, particularly for countries like the UK looking to expand their nuclear power sectors.

● The UK has a substantial amount of existing radioactive waste and is struggling to implement a long-term disposal solution, with the proposed underground geological disposal facility facing significant hurdles and cost concerns.

● Public and local community pushback against potential nuclear waste sites further complicates the development of new disposal facilities, making finding a solution an ongoing and difficult process.

One of the biggest hurdles to expanding the global nuclear power sector is the concern over how best to manage nuclear waste.While some believe they have found sustainable solutions to dispose of nuclear waste, there is still widespread debate around how safe these methods are and the potential long-term impact of waste disposal and storage.In the United Kingdom, the government has put nuclear power back on the agenda, after decades with no new nuclear developments; however, managing nuclear waste continues to be a major barrier to development.

Nuclear waste remains radioactive for around 10,000 years, meaning it is vital that governments dispose of all waste effectively to ensure people and the environment are kept safe in the long term.As more governments welcome a new nuclear era, they must address nuclear waste concerns and establish clear guidelines and regulations on disposal to ensure that all nuclear power companies adhere to strong safety standards and practices.

There are three types of nuclear waste: low-, intermediate-, and high-level radioactive waste.Most of the waste produced at nuclear facilities is lightly contaminated, including items such as tools and work clothing, with a level of around 1 percent radioactivity.Meanwhile, spent fuel is an example of high-level waste, which contributes around 3 percent of the total volume of waste from nuclear energy production.However, this contains around 95 percent of the radioactivity, making adequate waste management of these products extremely important.

In the U.K., the government continues to battle with how best to dispose of its nuclear waste, as it looks to expand the industry over the coming decades. The U.K. has 700,000 cubic metres of radioactive waste from its previous nuclear power activities, a figure that will grow as more nuclear projects come online. The government is now considering the development of a massive underground nuclear dump, known as a geological deposit facility (GDF), to safely dispose of the waste. While no site has been confirmed for development, it is expected to be developed in one of two potential sites in Cumbria, in the north of England.

A U.K. Department for Energy Security and Net Zero spokesperson stated, “Constructing the UK’s first geological disposal facility will provide an internationally recognised safe and permanent disposal of the most hazardous radioactive waste.”They added, “Progress continues to be made in areas taking part in the siting process for this multibillion-pound facility, which would bring thousands of skilled jobs and economic growth to the local area.”

However, the U.K. Treasury believes the government’s plan for the waste dump is “unachievable”, rating the project as “red”, or not possible, in a recent assessment. This means that, “There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable. The project may need rescoping and/or its overall viability reassessed.” In addition, there are concerns over the projected project cost, which is expected to be anywhere up to $73 billion.Richard Outram, the secretary of Nuclear Free Local Authorities, explained, “The Nista red rating is hardly surprising. The GDF process is fraught with uncertainties, and the GDF ‘solution’ remains unproven and costly.”

At present, the U.K. stores most of its nuclear waste at its Sellafield facility in Cumbria, which is viewed as one of the most complex and hazardous nuclear sites worldwide. However, with the planned decommissioning of several power plants and the development of new nuclear facilities, the government must address its imminent waste issue. This is a long-term problem, with it expected to take until 2150 to dispose of the country’s existing waste into a GDF, if one is developed, before disposing of new waste.

In June, Lincolnshire County Council withdrew from being a potential site for the GDF after engaging with communities about the proposal. This is a common problem with developing nuclear waste sites, as the pushback in proposed waste regions often prevents development due to a not-in-my-backyard perspective from residents in the area. It is still unclear whether communities in Cumbria will hold a similar opinion. Corhyn Parr, the CEO of Nuclear Waste Services, said, “A GDF requires a suitable site and a willing community and will only be developed when both are in place.”

Several countries around the globe are battling with how best to dispose of old and new nuclear waste, as a nuclear renaissance is starting to be seen, in line with global aims for a green transition. While nuclear power is now viewed as extremely safe and clean, there are pressing concerns around the adequate disposal of waste, which can be extremely harmful to human health and the environment if improperly managed, that must be rapidly addressed.

Source: Zero Hedge

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Daniel Carter

Political

The former construction tycoon also listed 1.09 billion baht ($34.5 million) of cash and deposits in more than two dozen bank accounts among his assets worth 3.9 billion baht.

Anutin, 58, disclosed his wealth to the National Anti-Corruption Commission as a requirement for government officials, and the agency made the record public on Tuesday.

The leader of Bhumjaithai Party, the third largest in parliament, and champion of cannabis decriminalization policy has ascended to power after the Constitutional Court ex-premier Paetongtarn Shinawatra for ethical violations. He received the support of the People's Party, the largest bloc in parliament, in exchange for Anutin's commitment to dissolve parliament in four months to pave the way for a general election and a public referendum to amend the constitution.

Anutin has investments of about 655 million baht and last year reported an income of more than 1.8 million baht, according to the document. Among his other assets are several deeds to land, four luxury cars, 22 watches, 24 amulets and 11 Benjarong porcelains dating back to the 13th century and initially made for royalty.

Anutin's royalist credentials have boosted his standing, arguably even above the leaders of military-backed parties. While he insisted he did not play any role in last year's contest for a new Senate, about 75% of new senators are linked to him or Bhumjaithai, according to political analysts.

Source: Bloomberg Europe

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Gerik

Economic

Significant Downward Revision of Job Growth Expected

The U.S. is poised to release a preliminary nonfarm payrolls benchmark estimate, with economists predicting a downward revision of up to 1 million jobs for the period from April 2024 to March 2025. This follows a disappointing jobs report for August, which showed nearly stagnant growth, and a contraction in June for the first time in 4.5 years. The revisions, based on Quarterly Census of Employment and Wages (QCEW) data, are expected to underscore a labor market slowdown that predates the economic impact of tariffs and immigration policies.

This suggests a direct cause-and-effect relationship between structural shifts in the economy particularly automation and changes in labor supply and the weakening job market. The revisions signal that the labor market was already struggling before trade-related shocks and tightening immigration policies.

Impact of Technological Change and Policy on Labor Demand

Sung Won Sohn, an economist at Loyola Marymount University, attributed the slowdown in job growth to a combination of technological change, rising financing costs, and uncertain policy signals. The era of rapid job gains is over, Sohn said, and businesses are recalibrating to adapt to automation and artificial intelligence, which are reducing the demand for workers. This marks a gradual adjustment rather than a sudden collapse, with businesses responding to long-term trends in technological disruption.

The effect of tariffs and immigration restrictions, which have reduced the labor supply, is now compounded by technological adoption in key industries, indicating a correlation between policy changes and labor market shifts.

Revisions Highlight Weakness Before Tariff Impact

If the final revisions come closer to the higher estimate of 1 million jobs lost, it would suggest that the labor market had already been nearly stalled in early 2025, well before President Trump’s tariff policies took full effect. According to Shruti Mishra of Bank of America Securities, the revisions will underscore how the labor market was underperforming even before the economic uncertainties sparked by the trade war.

The significant downgrades, particularly to the May and June employment numbers, have already caused friction with President Trump, who has accused the Bureau of Labor Statistics (BLS) of falsifying data.

Monetary Policy and Economic Reactions

Despite the downward revision, economists do not expect significant changes to monetary policy in the short term. The Federal Reserve is expected to proceed with its rate-cutting cycle next Wednesday, following its January pause. The expectation of rate cuts remains strong, particularly after weaker jobs data raised concerns about a slowing labor market.

However, concerns have arisen around the BLS's "birth-and-death" model, which is used to estimate job changes from businesses not included in the CES survey. This model has historically overestimated job growth, and the recent decline in the rate of new business openings could suggest further inaccuracies.

The upcoming revisions to U.S. job data signal a marked slowdown in the labor market that predates President Trump’s tariff and immigration policies. While the impact of these policies is still unfolding, the revisions suggest a deeper, longer-term issue in the labor market, exacerbated by technological change and political uncertainty. The adjustments may not only shape future policy decisions but also underscore the evolving challenges facing both businesses and workers in the U.S. economy.

Source: Reuters

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FXOpen

Forex

Technical Analysis

Economic

As the US Dollar Index (DXY) chart shows, the value of the USD against a basket of other currencies has fallen below 97.30 – its lowest level since late July.

The reasons lie in market sentiment ahead of major data releases:

→ On Wednesday at 15:30 GMT+3, Producer Price Index (PPI) figures will be published; a month ago they came in extremely high.

→ On Thursday at 15:30 GMT+3, Consumer Price Index (CPI) figures are due.

These releases are particularly significant as next week the Federal Reserve is set to announce its decision on interest rates – a 25-basis-point cut is widely expected.

US Dollar Index (DXY) Drops To 7-Week Low Ahead Of Key Inflation Data_1

Technical Analysis of the DXY Chart

On 18 August, we identified a descending channel (shown in red) based on a sequence of lower highs and lower lows → it remains valid.

In addition, our base scenario suggested that the index might test one of the quartile lines (QL and/or QH) dividing the channel → indeed, since then the QH line has been tested several times (red arrow), convincingly acting as resistance.

What Next?

Bearish case:

→ Lower highs and lows throughout the second half of August indicate that sellers are in control of the DXY market.

→ The black arrow marks bearish momentum that broke through support at 98.05 last week.

→ The drop was sharp (a sign of imbalance in favour of sellers), and yesterday the 98.05 level acted as resistance.

Bullish case:

→ The DXY has dropped into the median zone, where supply and demand often balance. Buyers may step in, viewing current levels as attractive for entry.

→ The RSI may potentially form a bullish divergence.

→ The latest candle on the right shows a long lower wick (a bullish pin bar pattern), underlining buyers’ determination.

Given the above, we could expect the DXY to hover around the median area. However, the upcoming US inflation reports could trigger volatility across financial markets. A test of support at 97.15 could occur.