Before we jump into the jobs data, let’s take a quick look at housing and tariffs.

Housing

Yesterday, the President announced that he had instructed people to buy $200 billion of mortgages. As is often the case, it was not accompanied by any detail, but it fits our theme that “markets are underestimating what this admin will do for rates.”

We have argued that the admin has 3 goals (pay more attention to Bessent here than the President):

• Front-end rates at or below 3%.
• 10-Year Treasury yields below 4% (i.e., with a 3 “handle”).
• Lower Mortgage Rates, which come from two factors:
  • Getting the 10-year yield lower.
  • Reducing the spread to Treasuries on mortgages (which this “purchase” program is intended to achieve).

Markets still seem to be fighting against their ability to do that. Just like the “buying of mortgages” and the “capture of Maduro” came out of nowhere, I expect to see more surprises on the rate side of things that defy conventional thinking. I haven’t looked at the betting sites, but if there was a chance to bet on “will the U.S. have yield curve control by the end of 2026,” I’d bet “YES” if the market was less than 20%-25%.

Housing starts were down and well below expectations. Building Permits were a surprise to the upside. In theory that is good (and would coincide with the admin trying to get more housing on the market to create “affordability,” but we still need to see permits convert to starts).

The Supreme Court on Tariffs

We might get a decision as soon as today.

As much as I would like to come up with a compelling market impact, I’m struggling to do that.

I think there is an 80% chance or greater that a lot of the tariffs under IEEPA will be judged inappropriate in some way, shape, or form (kind of in line with the betting markets).

There are so many permutations of what the ruling could look like, that it is difficult to assess market impact. My base case is:

• The ruling will not make it easy to get rebates on tariffs already paid (this will be either a direct result of the ruling, or the admin’s response to the ruling).
• The admin will announce alternative ways to implement similar tariffs. Had the Liberation Day tariffs stayed in place, that would have been difficult to do, since the rates were so high that they fell outside of the scope of many alternative methods.
• One or more countries that have announced trade deals (UK is high on my list) will say that they are going ahead with the deal regardless of the ruling.

So probably some noise, but if my “base” case is correct, the markets will move on.

The worst case is a harsh ruling that makes it easier to get rebates, as that would hurt Treasury bond prices. Maybe that is why we got the mortgage buying announcement?

The Jobs Data

NFP was kind of bleak. 50k headline number, missed estimates of 70k, and a whisper number of 60k. Lot of economists now think this is the “replacement” rate, so acceptable, but cannot help but think that it comes across as weak.

Subtract the two-month revision of -76k, and the headline number was negative.

• There were 187k workers who couldn’t work due to weather. I think that mitigates the headline number a little.
• The birth/death model adjustment was -67k, which I think also makes me more comfortable with the data than I would otherwise be. This model is fraught with errors (a lot of people agree), so I like that it wasn’t adding to the job market and is roughly the same order of magnitude as the data itself (I hate when it is multiples of the headline).

Manufacturing payrolls dropped this month and last month – ProSec™ cannot come fast enough!

Annual hourly earnings we up (good for workers), but weekly hours declined (not typically a good sign for future employment).

The JOLTS survey wasn’t particularly rosy either (though the QUIT Rate edged higher, which I take as a good sign).

The Unemployment Rate declined a smidge to 4.4%, but only because the Household Survey showed significant job growth in the month (looks like about 230k). Though there was no Household estimate in October and this survey has very wide margins of error (even relative to the high margins of error in the Establishment Survey, which is used for the headline numbers).

Bottom Line

The jobs data did not do much for the bond market and the probability of the next cut remains skewed towards June (with only a 53% chance of it occurring in April).

I suspect that the admin will ignore the improved unemployment rate. Well, let me rephrase that:

• When saying how well things are going, they will mention the unemployment rate.
• When pushing for rate cuts they will ignore it.

If the argument for cuts is:

• We are restrictive and have no idea what the neutral rate is, so we should cut because the neutral rate is lower – then this jobs report does nothing to stop that argument.
• If the argument is that jobs still look “punk,” then there is plenty of data to support that.
• If the argument is we need lower rates to take full advantage of accelerated depreciation and to jumpstart manufacturing and ProSec™, then that is still there.

I think the market is underpricing the timing and number of cuts and think it is time to buy not only the front-end of the yield curve, but also to extend duration. 2s vs 30s at 135 are underestimating what this admin is going to try to do to the bond market – and I don’t know why people are so comfortable betting that they won’t get their way!

I’m not arguing that this is the monetary policy path I would choose, but I’m arguing that this is the monetary policy path the admin wants, and they have shown “outside the box” actions in almost every arena, so why not in the bond market?

Have a great weekend, and I think this weekend’s T-Report, Fast and Furious 47, is in the process of writing itself. 😊 Unless it is derailed between now and Sunday by some new surprising events! We will be keeping a close eye on Iran, Syria, Cuba, and Colombia this weekend.

If you missed Academy’s Geopolitical Webinar, here is a replay that is worth the watch.

If you are still confused on why we think ProSec™ is rapidly becoming the replacement of ESG in terms of government policy, investment management, and corporate decision making here and across the globe, ProSec™ 2026 is worth a read!

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