How midterms and jobs week will affect rates

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the midterms and jobs week.  Related to this episode:  A path to sub-7% mortgage rates is back on the table https://www.housingwire.com/articles/sub-7-mortgage-rates-path/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  Top 5 Trending:  Exclusive: Victor Ciardelli on merger of Rate, Compass JVs into top-10 retail lender Exclusive: Victor Ciardelli on merger of Rate, Compass JVs into top-10 retail lender  Introducing the 2026 Tech Trendsetters https://www.housingwire.com/articles/introducing-the-2026-tech-trendsetters/  Real estate is moving toward more data privacy. Appraisers say UAD 3.6 is moving the other way https://www.housingwire.com/articles/uad-36-certification-25/  Open Real Estate gets a boost from independents — and an opening from MLSs https://www.housingwire.com/articles/open-real-estate-826-letters/  Better founder Vishal Garg details Tinman AI platform shift https://www.housingwire.com/articles/better-garg-tinman-ai-shift/  Want more from Sarah? Don’t forget to subscribe!  The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:10Welcome, everyone. I'm joined today by lead analyst Logan Motoshami to talk about the midterms

00:16and jobs week. Before we dive in, here are the top five trending stories on HousingWire.com.

00:21First is our exclusive interview with Raid CEO Victor Ciardelli on the merger of Raid

00:26and Compass into a top 10 retail lender, followed by HousingWire's 2026 tech trendsetters.

00:32Then we have real estate is moving toward data privacy. Appraisers say UAD36 is moving the other

00:39way. And open real estate gets a boost from independence. Finally, we have better founder

00:45Vishal Garg details Tinman AI platform shift. Okay, we are ready to dive in. Logan, welcome back to the

00:53podcast. It is wonderful to be here. This is day two of the crazy week. And today we will be

01:01addressing something that you love so much midterms politics. But it's, it's, you know, I've always had

01:11this thing throughout the years that of course, anybody who knows me, I don't even, I rarely talk

01:16about politics. And I just believe economics is demographics and productivity, the rest is stamp

01:21collecting. But in this case, we do have something, we have two items that, you know, the president

01:28chose to do that has impacted the economic data. And the, the midterms are going to be a judge of

01:35that whenever the outcome comes and it's jobs week this week. So for this episode, we're going to talk

01:42about both things and how it plays itself out for the end of this week. And does a 10 year

01:49yield just

01:50hold that head and shoulders as a breakup higher? Does it go lower, you know, and what do we think

01:56of the data that we've seen so far? So you are correct. I love politics. I love elections,

02:02no matter how they turn out. And what happens is just the administration of our money to take care

02:08of us as citizens and what that looks like, you know, and you and I've talked about midterms means

02:13that we really have a two year political cycle. It's so hard to get anything done on any sort of

02:18thing,

02:18unless you have some momentum that can not only get you the presidency and, and the, and the Congress,

02:25you know, in one cycle, but then a midterm that backs that up and almost always the midterm goes

02:31the other way. So it just, it creates a lot of bottlenecks. I always refer people back to the

02:37article I wrote 10 years ago, you know, manufacturing under president Trump, like, can this really

02:42materially change? And I, I laid the case out for, you know, decades and decades of information on why

02:49we can't really have like a booming manufacturing job growing sector anymore. And as, as a country

02:56gets older and older, they become more of a service sector economy. And, you know, what, what he,

03:03what he'd want to do would actually create a little bit more inflation and people tend to revolt.

03:07Like, like, Sarah, do you know a funny thing? Next time you see a, a Gen Z-er, ask a

03:13Gen Z-er that,

03:14Hey, did you know people were mad at Walmart for lowering prices?

03:19Oh, interesting. Okay. When was that?

03:20Try that because I, I, obviously Gen, uh, Gen Z wasn't around when, remember how the big push

03:26against Walmart, cause they would come in and they produced all these things at lower prices,

03:32right? Because small businesses would get, you know, bookstores would get knocked out and stuff

03:36like that. Now everyone, you know, everyone complains about inflation, but you know, Walmart

03:43creates a lot of supply. So does Amazon and they give really cheap prices, but you know, it was viewed

03:49back then as a negative, but now just the history of inflation surges, politicians for some reason,

03:58which is just the human element here. Politicians think they can survive inflation surges like they,

04:04but they, they, they, they roll the dice with that. And, you know, uh, we, I at least thought

04:09if Trump wanted to try to do this, as long as the energy prices were low and mortgage rates are

04:14lower,

04:14he could, he could get away with some of the core goods inflation, but that's not the case. And, uh,

04:19obviously, uh, people affordability and prices and everything is so, uh, top in mind and, uh,

04:26we'll see whatever happens with, with the outcome, but, uh, uh, uh, you know, trying to do a trade war

04:32and, and the conflict with Iran at the same time, obviously didn't work out, you know, and his polling

04:38is down, his polling on the economy is down. There's even a lot of red states, especially farmers and

04:42truckers that have to deal with things. And we've, we've really become a nation that tries to bail out

04:48farmers every year when we try to do this, that that's not a workable thing. So, um, and this is

04:54his last presidency. So obviously, uh, I don't know how many other Republicans want to go out there with

05:00this plan going out in the future. Uh, um, hopefully some Democrats would realize that we're

05:05very pro tariffs that trying to do something like this, it, you know, there's some difficulties to

05:11that. And this is where we are on the midterms that a does this midterm change the trade war,

05:20you know, uh, uh, uh, trajectory. I don't think Trump's going to try to find every legal way to

05:25still have tariffs. He can't live without tariffs, right? These plays New York bully ball with them.

05:30And then I'll obviously is, you know, the conflict ending, you know, if it does end, uh, um, uh,

05:37these two things are top in mind because these are two things that the federal reserve has talked

05:41about on needing to be more, uh, uh, um, hawkish in their stance. Now last year was different

05:48because, you know, every year, every, every trade war, I've only had two in my lifetime,

05:53but the first year of every trade war, the economy doesn't run right. Right. And last year

05:57jobs data was getting softer. So it didn't matter how hawkish the fed was sounding. The bond yields

06:02kept on going lower and lower because job growth started to go lower and lower and it's jobs week

06:06this week. So this is a good week to kind of review what, what, what, what happened,

06:10what's going to happen today. And then going out in the future, what, what could benefit housing?

06:14Cause it's going to be this theme AI versus housing for 2027. You know, one of the things

06:20that you've said that I haven't heard a lot of people talk about was the timing of the start

06:25of the war in Iran, because it was in February, we had had some, um, you know, we had had

06:30some

06:31headwinds. No, we'd had some tailwinds for the housing industry at least. And we had rates going

06:37lower. And so you've said that like, it's, that was a strategic time to start a war. If you thought

06:43the war was only going to last four to six weeks, because you had the room in the, in the

06:48interest

06:48rates for oil prices to go higher without it causing too many problems. And I think that's

06:53so interesting because I haven't heard a lot of people say that, you know, you know, when I,

06:56when I look back at, I mean, I didn't agree why the 10 year yield went under 4% because

07:02you know,

07:02the second year of every trade war, things do improve on the labor side of the data. And it

07:06started to get a little bit better. But I think what, what happened back then, I would back then,

07:12it was this year, the 10 year yield was under 4%, by the way, federal debt for all the people

07:17that

07:18say, nobody's going to buy our bonds because of federal debt. It was under 4%. But we had a lot

07:22of AI disinflation scare back then. And then there was a whole private credit issue. And so a lot of

07:29people thought that was recessionary because if you have mass unemployment because of AI and,

07:34and the private credit markets breaking, I mean, remember the whole commercial lending things

07:40that people thought that was going to create the recession, you know, that's in any case,

07:45the 10 year yield went lower. And even if I didn't agree with it, that's what happened. And then

07:49literally, okay, if you're going to go oil under 60, I think it was 50. I think it was 56.

07:56I might be

07:56wrong. 10 year yield under 4%. That's when you go, if you thought it was a four to six a

08:00week,

08:01but now imagine if it was, imagine if it was a four to six week event and whatever, whatever

08:07outcome they wanted, whatever the game plan was in any case that didn't happen. But imagine if the

08:12MOU deal stuck and you know, we were what? $68 right at the low end of where I thought oil

08:20can trade

08:21with the deal. Now that brought the 10 year yield was at what four, four 50 around there. So,

08:28but this obviously didn't occur and we're still dealing with the company, but also you can't do

08:34anything about the labor market recovery and yields going up because of that. That's fed policy,

08:38right? The AI boom is the AI boom, right? That's, that's, that's something out of the,

08:42you know, off the grid of what presidents and feds can really choose to. Now we're, we're pushing

08:49on construction growth in terms of the data centers, but, but the conflict and the trade

08:56war is something that the president controls. Those are his choices, right? So the general

09:01economy is expanding, right? That's the thing, right? The economy's unemployment rates are low.

09:06Jobless claims are low. Stocks are doing well. So, but inflation surges make people grumpy,

09:12right? And that's just the history, 2000 years, you know, of history and just, it never ends well.

09:19Right. For any politicians and those two together and how this conflict is dragged out. And

09:26this is why the polling has been very bad. And then, you know, what's the aftermath of that?

09:32It does, does, I don't think, I think Trump's going to do whatever he can to do legal tariffs

09:38in any kind his last two years. He, you can't take away his pet toy kind of away the last

09:43two years

09:43of his presidency. But, but if it calms itself down and we're collecting less revenue, then the

09:49tariff inflation can be somewhat tame. It doesn't get worse. And then if you get the conflict in the

09:55Middle East over with and oil starts to flow again, at least those two things that the Federal Reserve

10:00has said, we don't like this. We're going to be more hawkish because of this, because the labor data

10:05has improved. That's, that's, that could be a positive for housing going out for the next one year,

10:11two year and three years. If you take two of the things that the Fed has harped on their policy

10:17to be more hawkish. Yeah. You know, the midterms, it's hard to always see like, what is the effect

10:24going to be on housing when it comes to midterms? In this case, you know, we're looking for lower rates

10:29and you've outlined like that's tariffs, that's, you know, the Iran conflict, but it's not clear

10:35because we have a very unusual president what he's going to do after the midterms. So, I mean,

10:41even if you have a strong democratic showing, which is what people expect right now, they're

10:45not going to be, it's not going to be a veto proof show showing. So, you'd still have to have

10:50people

10:50in his party that say like, we really need to end this war unless he just wants to. So, it's

10:55going

10:56to be interesting. Even if he wants to, what does that look like? How long does it take? Because that

11:01to me seems like one of the biggest things we're looking at with rates.

11:04Again, Iran's economy is getting hurt really bad too. So, this, these type of sanctions and

11:15they have a lot of repairing to do for, for stuff. The prolonged effect of something like that

11:24becomes a calculus on their side. Can they govern, you know, can they keep paying the revolutionary

11:29guard, that stuff? But, but in any case, even with all that, the economy is still expanding.

11:35Job openings data came in today. Good. Unemployment rate is low. But regards to housing, I'm a 10-year

11:43yield guy. And if I go back in the last 16 years, I can show you the marginal changes in

11:49housing demand

11:50based on the 10-year yield and the slow dance, right? Of course, the spreads got really bad and then

11:54they, you know, they've improved. But if you look at housing data in the aggregate total,

11:59like I've done the last 16 years, the 10-year yield really runs a show. So, politicians,

12:05whatever, whatever they want to say or pro-housing plans or anything, the only thing that materially

12:11changed demand is the 10-year yield going up and the 10-year yield going down. And we have the

12:16last

12:17three years and 10 months to show this to be the case. When mortgage rates get below 6.64 and

12:23head

12:23towards 6, demand picks up. When they get above 6.64 and then thrust above 7, especially above 7,

12:30it slows down. We go nowhere. But we still have near 5 million total home sales. And I always harp

12:37on

12:37this because we're talking about the marginal buyer here. The peak in the last decade from 2010 to 2019

12:45with 3.25% and 5% ranges the entire decade out there with affordability much better, the peak was

12:52around 6 million. So, you're missing a million mortgage buyers from the peak of that period in

12:57time with housing 10-year doubling. So, this can explain the housing data in the last few years.

13:03But again, these variables really impact the 10-year yield. So, and I'm a 65, 75% Fed policy guy

13:10that

13:10drives that. And here we are. So, we'll see the aftermath of whatever happens, whoever wins,

13:16how many seats and if that changes the trajectory. But this one was one of these things that you roll

13:24the dice on two things that just, it's very difficult in a consumer-based economy. And

13:30especially with truckers and farmers, it's very difficult to drive. But here we are. And after

13:36this week, we'll have another paradigm shift for another two years. And then two years from now,

13:43we do it all over again. And these are two-year political cycles that China and Iran and Russia

13:48don't have to deal with. So, they get to play with that unfair advantage on that side.

13:57So, you mentioned the jobs report that we got today. Of course, this is going to be jobs Friday

14:01this week. But even today, the jobs data that we got was positive, which, you know, I mean, yes,

14:07great. That's great. Not great for housing, potentially. Not great in the housing sense.

14:13But this also shows the resiliency of the United States economy. Guys, if it literally wasn't for

14:20COVID, we'd still be in, this would be like year 16 of the longest economic and job expansion. And a

14:26lot of this, to me, has to do with the 2005 bankruptcy reform laws and the qualified mortgage

14:33laws of Dodd-Frank. If you're a consumption-based economy, and you base your economy on domestic

14:38spending, and you never allowed people to lever up in a big fashion, at least consumers,

14:46you have the potential to have long economic expansions. And here we are, oil up, Fed hikes,

14:52every, I mean, how many things have we thrown out here? But balance sheets and incomes and wages

14:56of consumption is still held. That's what the Federal Reserve has talked about. Our private domestic

15:00consumption of GDP has been very stable, and they've been 100% correct on that. But regards to

15:06today's numbers, job openings were up, hires were up, quits were up, layoffs were down. It isn't like a

15:13spectacular thing, but it was noticeable. So 10-year yield perked up just a little bit. But again,

15:18we are, the Fed has basically told the markets we're getting back our emergency rate cuts from last

15:25year that we really didn't want to do. And as long as it stays to that, it's somewhat workable if

15:31we

15:32could get the two other variables out. Now, the AI story is different. Now, today, CoreWeave and Intel,

15:38if you just want to follow the AI trade, just follow those two because they've just been crushed

15:43recently. Both those stocks were up 6%, 4% respectively at some point today. And we just try

15:49to work off of that. And I know this isn't fun. Who wants to talk about the 10-year yield

15:54and what

15:54drives this and all? But that's my thing. So I got to figure out, can this break lower and get

16:00sub-7% mortgages before Thanksgiving? And we'll get some answers, obviously, by the end of this week.

16:07But the first jobs report was very healthy. And the Federal Reserve loves job openings. A lot of people

16:13hate job openings because they think it's fake, but it's been remarkably accurate in terms of is the labor

16:19market tight or not tight. It's rolled with a lot of other datas. I'm a big job openings person. I

16:24remember 10 years ago, I wrote about, hey, y'all, job openings is going to get to 6.21 million.

16:29People are like, no, my God, it's no, we have 96 million people out of work. People have been

16:32sitting homes since the Peloponnesian War collecting benefits and not working. No, that's not been the

16:38case. Population growth slowing down means you don't have enough labor, especially if the labor

16:45market gets tighter. So a positive day on that side. But it'll be interesting to see how all the

16:53jobs data and how the 10-year yield acts when you're up here. It's much different if the 10-year

16:58yield is at 4%. But when you're up here and you're priced in a lot of things, other variables start

17:03to

17:03come into play.

17:05We will see what that end of the week jobs report looks like. Okay. Well, a couple of times ago,

17:11you talked about like where we are right now. It's kind of like, sometimes you have to put

17:15both hands on the burning stove. Are we still, do we still have both hands on the burning stove?

17:21Yeah. I mean, I, you know, you know, I, I harp back to that article I wrote 10 years ago.

17:29It's

17:30difficult. It's what Trump wants to do. Now, the first trade war was very small. President Trump

17:39waited until the corporate tax cuts were passed. And then he went into the trade war, knowing the

17:45fact that it can create some drama. So he thought if I get the corporate tax cuts, then business

17:50investment will still stay fine. Business investment was flat that year. Okay. Inflation never really

17:59took off as a very small trade war compared to this. Now, this time around president, I'm not a

18:05corporate, forget corporate tax. So I got a, this AI boom is going to keep things going while I do

18:11this

18:11trade war. And it's actually correct. If you look at job openings data, it's construction, mining,

18:15and manufacturing. A lot of the manufacturing growth are in areas where that, that aren't tariffed,

18:20you know? So, so he's got that, which he didn't have in 2018. So that keeps things going, but

18:28inflation took off and it's just, it just doesn't work, right? If you have a lower dollar,

18:33lower energy prices, lower rates, you can get away with a lot of things, but it all just backfired.

18:37So yeah, both hands on the stove kind of, and you get to see how the country reacts to something

18:43like that. And I mean, I'm not, I don't follow politics. I don't watch TV. It doesn't seem like

18:48it's like a democratic message. That's winning the things. It just seems like, just like the,

18:54when Trump lost to Biden, people get fatigued by this, but this time the fatigue came with

19:00inflation. It's just very hard. So yeah, both hands on the stove and then hopefully going out

19:04in the future, Republicans and Democrats know there are limits to what you think you can do in

19:10a two-year political cycle. And this was a test, man. They, they, gun hoes have never owned. They

19:15went for it, man. Godzilla tariffs and everything. There's limits to what can do in, in this kind of

19:20process. Logan, thank you so much for being on. We will talk again soon. Pleasure.

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