It seems the hot jobs report released this morning has already run out of steam.
The Bureau of Labor Statistics released the delayed January jobs report this morning, showing the surprise addition of 130,000 jobs.
That was well below the median forecast of 55,000, but there were again, revisions…
So many revisions lately, including a massive annual revision for the year 2025, revised down from 584,000 jobs created to just 181,000 last year.
As such, bond yields that jumped higher initially are now mostly flat again, meaning mortgage rates could continue to inch ever closer to the 5s.
Is the Jobs Data Actually Good or Another Fake Out?
It appears the initial warm reaction to the jobs report has already faded.
The 10-year bond yield, which serves as a bellwether to 30-year fixed mortgage rates, came out of the gate flying higher after January jobs were announced.
It jumped about seven basis points to 4.20%, before falling to nearly flat levels on the day.
Had it stuck, it would have erased much of the improvement seen after December retail sales came in cold on Tuesday.
But instead, it seems traders have parsed the jobs report a bit more closely and determined it’s not all that great.
Sure, there was a headline beat, but upon closer inspection, it was once again driven mostly by health care jobs.
We can’t all work in hospitals and insurance billing departments if we want this country to continue moving forward.
And indeed, 82,000 of the jobs added could be attributed to ambulatory health care services (+50,000), hospitals (+18,000), and nursing and residential care facilities (+13,000).
Another 42,000 came via social assistance, which doesn’t exactly ring economic golden age does it?
On top of that, total nonfarm payroll employment for November was revised down by 15,000 and December was revised down by 2,000.
So who’s to say the January numbers don’t get revised lower as well?
Speaking of, the change in total nonfarm employment for the year 2025 was revised from +584,000 jobs to just +181,000.
That’s the worst year for hiring since 2020 (pandemic), and the worst since 2003 outside of a recession. Ouch!
Mortgage Rates Avoid a Big Setback
The takeaway, for now, is that mortgage rates avoided what could have been a major setback.
In recent history, when we saw a big jobs beat, mortgage rates surged higher, as seen on the MND chart above.
This was most notable in September 2024 when right after the Fed finally cut, a hot jobs report led to a huge jump in 30-year fixed mortgage rates.
At the time, they were headed toward the 5s, but instead reversed course and rose back toward 6.50%.
They eventually climbed even higher after Trump became president and breached the 7% mark again.
Perhaps this time is different.
The September 2024 jobs beat was similar, with 254,000 jobs added versus the 142,500 expected. And the unemployment rate falling from 4.2% to 4.1%.
But today we seem to be moving in the wrong direction, with this beat feeling more like a one-off that will eventually get revised lower.
And the backdrop of the massive annual revision to job creation for 2025 also weighs heavily.
Maybe that’s why mortgage rates barely budged on the news today, especially interesting given they fell a lot the day prior on weak retail sales.
They easily could have bounced a lot higher if the jobs report was truly a strong one.
One possible explanation is that bond yields today are priced higher and reflect today’s current economic environment a bit better.
But it does make you wonder if labor isn’t so hot, and could continue to show signs of slowing and weakness in coming months, especially as AI starts actually taking jobs.
If that plays out, it would lead to lower mortgage rates, all else equal.
And given we are once again knocking at 5s’ door, the possibility of mortgage rates firmly in the 5s this year seems pretty plausible.
Read on: 2026 Mortgage Rate Predictions
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.