Orion’s management reminds brokers to tell their clients that the U.S. Federal Reserve doesn’t set mortgage rates. The Fed, however, bases its moves on economic data, and that same economic data drives bond investors’ demand for securities backed by mortgages, and therefore interest rates.

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We mention this because economic data that was released last week suggest that the odds of a Federal Reserve interest rate cut later this month fell dramatically Thursday as new data showed strong growth in the labor market, diminishing the case for lower rates. the Bureau of Labor Statistics reported that the U.S. economy added 147,000 jobs in June, beating expectations. In addition, the U.S. unemployment rate fell slightly to 4.1 percent.

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In financial markets, the chances of a Fed rate cut at the next policy meeting in late July plunged to just 5 percent following the jobs report, down from 24 percent a day earlier, according to the CME Group's Fed Watch Tool. That's because the Fed is seen as unlikely to lower its policy rate until the labor market weakens. Once again, this is because the major economic data released last week was a little stronger than expected overall: The labor market continued to perform well despite investor concerns. As a result, mortgage rates ended the week slightly higher.

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Orion’s management enjoys digging into the numbers, and brokers should be aware of them since explaining to your clients why U.S. interest rates are not moving lower is important. The economy added 147,000 jobs in June, above the consensus forecast of 110,000. Particular strength was seen in the government, healthcare, and construction sectors. The unemployment rate unexpectedly declined to4.1 percent, the lowest level since February. Average hourly earnings were 3.7 percent higher than a year ago.

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On top of the government data, the latest JOLTS (job openings and labor turnover rates) report, covering the month of May, suggested unexpected strength in the labor market. At the end of May, there were 7.6 million job openings, the most since November 2024. The ratio was about 1.1 openings for each available worker: A larger number of openings suggests that companies face more pressure to raise wages to hire enough workers.

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This week bond market investors will continue to look for additional information about tariff policies and monitor the situation in the Middle East. It will be an extremely light week for economic reports, which brokers know often means that headlines tend to move the financial markets. That said, we expect interest rates to move very little as the week goes by, and that means Orion and our brokers can focus on helping clients find the best product for their needs rather than trying to second guess where interest rates are heading.