Overview: Over the past week, Friday’s key labor market data was mixed, and today’s news from the Federal Reserve contained no surprises. As a result, mortgage rates ended with little change.

The important monthly Employment Report contained mixed news. The economy gained 136,000 jobs in September, below the consensus of 145,000, but upward revisions added 45,000 jobs to the results for prior months. The unemployment rate, which is calculated based on surveys of workers, unexpectedly declined from 3.7% to 3.5%, which was the lowest level since 1969. Average hourly earnings, an indicator of wage growth, were flat from August, far below the consensus for a substantial gain.

The minutes from the September 17 Fed meeting released on Wednesday revealed that officials remained divided about the appropriate future path of monetary policy. The greatest source of uncertainty for the economic outlook was the impact of reduced global trade due to increased tariffs and other trade restrictions. Investors now expect a cut of 25 basis points in the federal funds rate at the next meeting on October 30 and are roughly evenly split about whether there will be an additional rate reduction of 25 basis points in December.

Another round of trade talks between the U.S. and China are scheduled to begin later this week. Ahead of this, the U.S. has placed visa restrictions on some Chinese officials and has added 28 Chinese firms to a trade blacklist. Despite these hostile actions, it was reported that the Chinese are open to a partial trade agreement as long as no more tariffs are imposed.

Week Ahead

October 10 — Consumer Price Index (CPI)

October 14 — Mortgage markets closed in observance of Columbus Day

October 16 — Retail Sales report