Markets Just Not Believing

Geopolitical Tensions Keep Rates Volatile 

There are reports flying in every day of updates from the conflict in Iran. Is peace around the corner or months away? Are there going to be American “boots on the ground” or are we coming to an end? Will Hormuz be secured or will energy prices remain elevated? Markets listened to many speakers this week including President Trump. There were some wild swings up and down in rates, but the week ended rather flat.   

Hormuz Strategy Uncertainty Confuses Markets 

US Treasury Secretary Bessent started the week by stating that the US was going to take control of the Strait of Hormuz, an important oil and energy waterway in which a large portion of world energy passes. When President Trump spoke Wednesday, he stated that the US would not take control of Hormuz and demanded that the countries that used it, like Europe, come and defend it. There is no doubt that President Trump uses misdirection as a method of negotiation, so markets really don’t know what to believe.   

Michigan Sentiment Falls, Rate Hikes Fade 

Mortgage rates did like the negative news from the University of Michigan Consumer Sentiment Report. The index fell to 53 from 57, with the weakest component being employment. 61% of respondents felt unemployment would be higher over the next 12 months. These results effectively quashed any talk of a possible Federal Reserve (Fed) rate hike in the near future. There is still a good chance for another cut by the end of the year. 

Fed Commentary Dismisses Oil Shock Risks 

Adding to the calming rate hike fear was Fed Chair Powell explaining that the Fed can look past oil price shocks. They are worried about the drag on economic activity that rising energy costproduce. Household budgets and businesses get squeezed as these costs increase. NY Fed President Williams also echoed that there is no need to hike rates. He believes that the effects of oil prices and tariffs should reverse later this year. 

JOLTS Report Shows Weak Labor Demand 

Job Openings and Labor Turnovers (JOLTS) came out for February from the BLS, totaling 6.9 million job openings. This was weaker than expectations. The hiring rate fell to 3.1%, the lowest since 2011, when removing Covid. The quit rate fell to 1.9%, tying the lowest since 2014, also when removing Covid. This low rate shows that employees aren’t leaving the company because there isn’t as much demand from competing companies. 

ADP Report Shows Weak Job Growth 

ADP released their March Jobs Report. This showed that 62,000 jobs were created in the month. This was stronger than the 40,000 expected but still a relatively weak number.  When we see the sector that the jobs come from, we can easily see the weakness.  Education/Health Services contributed 58,000 of the jobs. This is not an economically sensitive sector. Three out of every four jobs over the past 2 years have come from this sector. That doesn’t show a strong employment market. 

Challenger Report Highlights AI Job Cuts 

On the job cut front, Challenger Job Cut Report showed there were 61,000 job cuts in March with 25% of them due to AI. There was a decline in planned hirings of 6% less than in Q1 2025.   

Revelio Report Confirms Weak Hiring Trends 

Another respected jobs report is the Revelio Labs Jobs Report which showed that 19,400 jobs were created in March. Similar to the ADP report, 16,000 of them came from Healthcare. 

BLS Jobs Report Shows Surprising Strength 

The big report of the week was the monthly Bureau of Labor Statistics (BLS) Jobs Report for March. Markets are just not believing this report. We have discussed this time and time again.They did it again: The headline report showed a whopping 178,000 jobs created compared to the expected 60,000.  

BLS Data Conflicts With Private Reports 

When we look at ADP and Revelio, this number is nonsensical. ADP and Revelio do not include government jobs and focus only on the private sector. BLS stated that the government sector lost 18,000 jobs in March. That means that the private sector grew by 196,000 jobs compared to ADP’s 62,000 and Revelio’s 19,000.  

As has been the pattern for years, the BLS revised its already terrible February report lower. It originally showed 92,000 job losses, but was revised downward to 133,000. In the numbers, Healthcare accounted for 76,000 of the jobs. About 35,000 jobs that had been on strike were also included in these numbers.  

Household Survey Shows Workforce Shrinking 

Switching to the Household Survey component of the BLS report, we see that the unemployment rate went down to 4.3% from 4.4%. That is great news, right? Wrong. 

The rate can go down for two reasons. 

1. More people in the workforce are employed (the reason we hope for). 

2. Fewer people are in the workforce (not a good thing).  

This time, the decline is due to #2. The labor force shrank by almost 400,000 jobs in March. That means 400,000 people stopped actively looking for work. The Household survey also estimated that 64,000 jobs were lost. That doesn’t jive with the 178,000 creations produced from the Business Survey component.  

U-6 Unemployment Rate Ticks Higher 

If you add the people who have stopped actively looking for a job but still want one, you get an unemployment rate called the U-6. That rate increased from 7.9% to 8.0%. This is likely a more realistic unemployment rate for our nation. 

Looking Ahead: Next week is inflation week 

 It is likely that the surge in energy prices could show up in the CPI report and hurt mortgage rates. Be careful! 

Tuesday, April 7: ADP Weekly Employment Data, Durable Goods Orders 

Wednesday, April 8: 10-year Treasury Auction, Fed Minutes from March meeting 

Thursday, April 9: Personal Consumption Expenditures (PCE for February so a bit old as they are catching up), and GDP Q4 Final Reading 

Friday, April 10: Consumer Price Index (CPI)