That is the new high going back to august 27th, now settling back to 4. 76. Rick santelli is here with the latest on yields for us. We will dig into what todays report is really telling us about the economy and the fed and biomet is tracking the Housing Market. Before we dig into that, lets look at todays market action. This is quite a turnaround. The s p is at 42. 97, up 39 points. At one point today, post jobs number and everything else, we were actually down 39 points. We got as high is up 47 on the day at one point today. That is how big of a swing it was. We took out yesterdays lows and at the highs, we take out yesterdays highs. That is how big of a swing it has been so a lot of people watching this turnaround say what could it all mean, that is a conversation were going to have later on in the show. The dow is up 246 points. The nasdaq, up nearly 1 1 4 , 160 points for the nasdaq composite of. As for this week in review, all morning, we have been saying we are on the precipice of the fifth straight week in declines for the s p 500. With this reversal, we could be positive and snap that streak. That remains to be seen. But, where it comes to the underperformers, believe it or not, in this rising rate environment over the course of the last several weeks now, it has been technology and Communication Services that have led the way higher. Meanwhile, the biggest declines are no surprises given the following fuel prices is the energy sector, so that is your state of play on the sector side for this week. As for the stocks, the best performers in the s p 500 and what was shaping up to be a down week, check out the names when it comes to markets, exchanges and trading. The best performing stock in the s p over the last week, Market Access holdings. They do an online bond trading platform. In the cmd group and see in the global markets, futures and options trading. This volatility right now is leading to some really nice gains. Thank you for connecting those dots because imlooking in going this is kind of muted, stocks are not doing that good but it is bond striving all of this, isnt it . Maybe even commodities. And rates trades. A lot of people try to take positions, speculate on for the future direction is going to be. That helps explain it. Over to rick now can help explain what striving all this interest many are questioning todays reversal in yields. We see that we spiked up to nearly 4. 90 and we did have strongjobs. This is the best since januarys 472, thats the best of the year. Slow wages seem to be what the market concentrated on but remember at 4. 78 we are up 21 and tens. If you look at 505, 506 and the two year its only up a handful of basis points. If you look at what happened on wednesday, here is what technicians would tell you. We ran out of gas just shy of 4. 90. Today after the number, very similar and when they reassess some of the weaker details, 3. 8 of 4. 90. Today after the number, very similar and when they reassess some of the weaker details, 3. 82 weeks in a row, that some of the highest unemployment weight rate, lowest since february 22. If you look at 4. 2 on yearover year Hourly Earnings, lowest since january of 21. I think that failure is a temporary issue. I would look at it to have long term significance but i think it is important, especially considering the reversal, dont underestimate uturns on a friday afternoon and one other thing down talked about. When you have higher highs and lower lows on a guns hot day in equities, if we get a close that is higher or a close that is lower it becomes an outsized day with prioritize technical significance. Just to be clear, that significant points to yields having peaked now . I would think what that means to me is were going to consolidate going into the closing hour most likely near 4 3 4 but it doesnt change the big picture. Long maturities are still hot and anybody more worried about funds, should definitely pay much more attention to the long and as it aims toward 5 and beyond. Thank you very much. And here is a recap of that jobs report. Nonfarm payrolls of 336 and here is a recap of that jobs report. Nonfarm payrolls of 336,000 in september. Unemployment rate at 3. 8 . Average Hourly Earnings only went up to tents. The employment for july it was revised higher. Will all this force the feds to hike again in september . November . My next guests i know. Diane. I think this was a great jobs number, and im glad to be wrong this time. I think steve did the calculation. I got a d, you know its okay to get a d and have the economy do much stronger i will take it after doing well on the jobs reportbefore and revisions on the other side. The important thing is first of all that 3. 8 Unemployment Rate. Its not because we had more layoffs. We actually had fewer layoffs during the month and we are absorbing the new workers coming into the labor force. Much of the increasing participation is this quirky thing with teenagers that is hard to capture in august and september. That said, this is a great number overall. 95 of the job gains in two sectors that had been lagging, leisure and hospitality, and healthcare healthcare was very late to reach a previous peak. We finally recaptured the previous beacon restaurant hires, and that matches up with new business formation has positive from online retailers coming out of the pandemic to know Food Services and construction, coming out of urban areas going into suburban areas that is going overall employment, so you are seeing what should have been the hardest mile for the marathon for the fed has become a relay race were now you see sectors that were lagging, including the government sector picking up. , i thought that was quite striking. Several people have highlighted this saying this is a report very much driven by non cyclical parts of the economy, by education, by healthcare, and does that change kind of our conclusions about whats going on with the Business Cycle . I dont think so. There were definitely some quirks in there and we saw this coming. Diane, i dont grade you. I grade myself poorly. I wish there was something i could go back and see, i missed this, i miss that, that there was some kind of indication of a strong number coming. I think the claims number spoke to an even type of jobs report. The homebased type of data was a bit stronger. That was something to Pay Attention to, so im going over my work, too, so im not grading you on this. Kelly, i do think the revisions hire if this were one strong outline number, and they had not revise the prior too much higher, i would say take this with a big grain of salt. Obviously any number with a grain of salt but the idea that the three month average of job growth which at eight growth which at 8. 29 this morning, you have to think the economy is doing better than we thought. You have to think that the job market is not as soft as the fed hoped it would be, and then after you say those things, you have to wonder how much concern is the fed going to have that they are not getting the softening in the job market . In which case, you say okay. Maybe they will be satisfied with the idea that wages are not going up strongly, but i dont know if that is the case. I think theyre going to be looking at that last rate hike of the year is a real possibility but watching what is happening with the 10 year to say you know what, maybe we dont have to do it if the Inflation Numbers are maintained. What would the strike effect be in ll of this . Uaw i think we were waiting until the next one to see this and that kaiser healthcare workers strike looks like it may broaden from three days to another 10 days as they move into the weekend. Any impact from that yet . Not from the kaiser strike yet, and the uaw strike will show up in the october report as long as it continues into next week. We did see this break effect of the writers and sag strike. That broadened and is also were some of the weakness and wages were. But, in the broader context, steve is right in that this is where i dont think the fed is going to do another rate hike because the bond market, as of yesterday, basically we have the equivalent of another rate hike in there from the bond market and as long as the bond market stays buoyant, those bond yields will do a lot of the heavy lifting for the fed, but that does not change the feds even higher for longer, and the second half of the year, we are taking rate cuts out of next year, and we delayed when the fed is actually going to cut rates and i think that is important because that is where the fed is at right now and that is what this data tells you. A stronger economy, even as inflation is cooling, they dont want to risk backtracking on losing ground on the inflation improvements weve seen, but on the flipside of it, they also dont want the stronger economy justifies higher rates and i think that is something lost in translation. Also, the fed is thinking about the noninflationary rate is now moving up on the other side of this, as well. Could you all at home right this down so we dont have to repeat it . I really hate having to do this, but striking workers do not appear in the household survey, so there will be no impact on the Unemployment Rate because they are employed, but not at work. They will show up in the employment survey, the payroll side of things, because they are not employed. They will not show up in claims, because they voluntarily left their work, so that is what is going to happen. You wont see it in the claims numbers are the household numbers. You will see it next month in the payroll numbers. Thats helpful, steve. Parts suppliers and things like that will start to show up. You will see some impact, i believe. The manufacturing numbers have been very strong, but you have the last two months, very good manufacturing numbers after a lousy july, but it should be getting to show up there. A lot of that is people simply losing their job so that will not be a complication. Just to try to poke one more hole in this, i just want to bounce this off both of you, we have known that because of the pandemic the seasonal adjustments are little quirky, especially around teachers going back in september and the fact that education and healthcare have been so strong, is there any chance this all gets revised, even the strength in claims the last four weeks ago or so. Do you think theres anything fluky going on with that . Im surprised we are getting as much but it was mostly in state rather than local education, and thats colleges, so i do think it is probably real. There is the not seasonally adjusted teenage Participation Rate fell in august and september and we dont know that seasonal adjustments are right, so these are quirky data. Usually the august number is a cooler number and gets revised revised up and this year prove that true. I think it is important. Also, this uaw strike is very different than the strikes we had in the past. They have been very careful we counted up so far 2600 Collateral Damage workers in terms of people who are furloughed as a result of the strike. It has not had the kind of spillover effects that weve seen in strikes if youre watching that closely. Morgan stanley just said the cumulative effect is going to be 0. 1 on usedcar inflation, so not a big number there but can i ask, diane, more people working, hours worked about the same. Do you pencil and higher gdp from todays numbers . First of all, the Third Quarter is over 5 right now. Its the strongest quarter. Its strong, yeah. And even the momentum into the Fourth Quarter now is still solid, and this was a year taylor swift, beyonciâ– you name it, all of that. Taylors not touring anymore, diane. I know, but the important point here is that we still have plenty of momentum and we need to cushion that in savings. Those benchmark revisions over double the excess savings for mastering the pandemic so we have more savings that we didnt know we had and that is really going to help us, as his student loan payments coming due. Im not worried about the headwind i thought that was going to be. Did you think you were going to have to talk about taylor swift when you are covering economics over the journal . She is in the movie theaters now, so we have a few more months of taylor economics. Always appreciated. Thank you so much, talking about the full impact of this jobs report. Lets turn to the impact on the mortgage market. Mortgage rates have climbed again today. Lets get to diana. She can run us through the numbers. Mortgage rates usually follow the yield on the 10 year treasury so no surprise it is starting to get ugly. The average moved higher to 7. 48 , up more than half a percentage point and one week and nearly a percentage point from the start of september, not great news from for homebuilders who really had to struggle to get out of the red this morning. To get a picture of just how much affordability has been crushed if youre buying a 400,000 home today and put 20 down on a 30 year fixed you are paying roughly 965 more per month than you would have just two years ago when rates were around 3 in that does not even factor in that the same house is now 17 more expensive than it was two years ago before the feds started raising rates and 40 more expensive than the start of the pandemic. We are hearing theres a little bump in supply coming on the market now, that it is unlikely to be enough to counter the higher costs. We will see, though, if these higher rates start to take the heat out of home prices. Quickly, it must drive you crazy on the Mortgage Rates, where are these numbers drawing from . Why 7. 84 . Mortgage news daily runs the numbers every morning by about noon time. What we get on freddie mac and nbas weekly averages and on freddie mac it is from last week, or the days before wednesday and nba is the week before, so they are lagging. We are lucky enough to have these daily. Stick around. I want to talk to matthew graham, as well, now. He says it is no longer just about the fed here, everybody. Mortgage rates are at the whim of other events, as well. Matthew, its great to have you on the program. Welcome. Great to be here. Thank you. And we should emphasize this is not always true. They are affected by tons of other global events but especially so right now. You, and just a minor point of order, they dont necessarily price off the tenure. They correlate highly with the tenure overtime but they actually price off of securities, which are very closely related to the 10 year in general but we have somes distinct differences since the fed started not buying bonds. Another chance what i have been talking to you i and diane up now there are efforts making the rounds saying maybe fannie and freddie need to do something your to bring down the cost of Mortgage Rates in particular. What could be done by the marketplace to try to cushion what otherwise has been a Mortgage Rate highly tailored to what is happening with bond deals . Yes, this is a frustrating thing in my audience specifically doesnt like to hear what i have to say about this but nothing is going to be done at any level to try to ease the pain of rates. The Housing Market has been central to the inflation problem we have. We can talk about affordability being rough for new buyers and that is very true, but at the same time, we have to consider what happened in 2020 through the middle of 2022 with people who are able to refinance that 2. 53 rate and free up a ton of cash flow that has subsequently driven inflation, and that has resulted in a cranky your Federal Reserve and rates moving higher, so i dont think youre going to see a lot of love on an official level weather that is from fannie, freddie or the family itself. Diana, do you agree . Because housing is the one place where officials really want to come into the rescue and weve seen a lot of efforts over the last couple of decades. Affordability is worse now than its ever been. I tell you what. I get dozens of emails in my inbox every day from various government organizations saying the government has to do something, we have to get affordability back. I cant tell you how much realtors are getting hammered by this and how Real Estate Agents are fleeing their jobs right now because they have nothing to sell, but i think matt makes a great point, and that is that so much inflation right now is driven by housing in we are seeing that still in the rents but home prices up 40 is astonishing in just three years, so i agree that i dont think anybody at the government level will do anything to bring back those rates to a point where home prices can climb higher and higher. The question is, what can you do on the lower down payment, on the fha side, on some kind of programs to help people afford housing without bringing rates down to these abnormally low levels. I mean, 2. 75 is really just going to create a market thats going to be on fire. Youre never going to be able to put that out. The argument was from dave stevens, briefly obamas fha commissioner and he says fannie and freddie should return to the nbs market. We are going into an election year, and maybe somebodys going to look at this and say yes, maybe they should because the spread between Mortgage Rates is wider than its historically been in the fed does not look like its coming back into the mark market anytime soon. Yeah, its not coming back into the market because it realizes it has accidentally, maybe unavoidably, played a role in driving inflation in 2021 purchases, so i think even recent fed comments have said the Housing Market is doing kind of what we wanted to do, and thats unfortunate. The fed might say that and they can say that and try to understand the macro effect but you dont think the political side of this in washington with the Housing Market into the election year, somebody might say you know what then, fannie and freddie, you go buy nbs and bring that rate down. I think diana nailed that point in there can be a push for initiatives that affect affordability without trying to manipulate the broader Financial Market and that is really the ill effects of fiscal stimulus, and especially relentless to eat in 2021, so that is right on. If we have tohelp affordability, it has to be at a fiscal level. Thank you both. Really appreciate it. Historic moment here for housing and mortgages. Still to come, exxon mobil nearing a deal to buy pioneer natural resources. Our next guest says it