Mortgage rates hit new 2025 low as jobless claims spike

"I do want to note that I don't take a one-week spike in jobless claims too seriously, and this particular spike was notably large, primarily coming from Texas. However, the more significant story is that the 10-year yield hit 4% this morning, reflecting that labor over inflation has been consistent in 2025. In today's episode of the HousingWire Daily podcast, I discuss the two major reasons behind these trends in 2025."

"Because everyone has been reading about softer labor data lately, bond traders have itchy fingers, and they totally did not care about the CPI inflation report at all all they saw was a massive spike in the jobless claims data and they started buying bonds. The state of Texas was the primary contributor to the recent surge in jobless claims."

"Continuing claims, which refer to individuals applying for unemployment benefits over an extended period, are at a three-year high. This indicates that the labor market has softened considerably, although it has not collapsed yet. Since 2022, I have said we shouldn't be discussing a recession until we see jobless claims head toward a four-week moving average of 323,000. If we examine economic history and adjust jobless claims to the civilian labor force, then this number would flag serious recession fears."

"We have seen some fluctuations in the four-week moving average, but never a consistent move toward 323,000 and today the four-week moving average is at 240,500. We always like moving averages with weekly data because sometimes the data can get wild week to week. We have now been through jobs week, inflation week and the last jobless claims print before the next Fed meeting."

A large, Texas-driven one-week spike in jobless claims prompted heavy bond buying and helped push the 10-year yield to 4%. Bond traders prioritized softer labor data over the recent CPI report. Continuing claims sit at a three-year high, indicating notable labor-market softening without a collapse. A four-week moving average threshold near 323,000 (adjusted for the civilian labor force) would signal severe recession risk; the current four-week moving average is 240,500. Weekly volatility motivates use of moving averages. A consequential Federal Reserve meeting is approaching while mortgage rates have eased in the interim.

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