The key takeaway from this BLS report is that we now have more unemployed workers than job openings. This is significant because the Federal Reserve has traditionally valued job openings data and has emphasized that there have always been more job openings than unemployed workers in the past.

On this news, the 10-year yield fell a few basis points and this is one of four labor reports we will get this week.

Job openings

From the BLS: The number of job openings was little changed at 7.2 million in July, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were unchanged at 5.3 million. Within separations, both quits (3.2 million) and layoffs and discharges (1.8 million) were unchanged.

I believe the Federal Reserve views this data positively because its primary goal is to reduce wage growth back to around 3%. They don’t have much faith in the productivity growth narrative, so achieving 3% wage growth with 1% productivity could help reach the 2% inflation target.

Now that there are more unemployed Americans than job openings, this situation should provide them with some reassurance. As shown below, the Fed has made significant progress in reducing job openings from nearly 12 million following the COVID recession to about 7.2 million.

Jobs week continues

We have several more important economic reports coming out this week, including the ADP jobs report, jobless claims report and the crucial monthly nonfarm payroll jobs report from the BLS on Friday. The previous BLS jobs report was significantly below expectations, so even a small improvement would be notable. I recently discussed how to approach jobs week in this episode of the HousingWire Daily podcast with Sarah Wheeler.

It’s been very hard for the 10-year yield to break under 4.18% and stick this year. The only way we did this was in the aftermath of the Godzilla tariffs, when stocks entered a brief bear market. So until we are able to do this, I wouldn’t get too excited about rates going much lower. Of course, mortgage rates are already near year-to-date lows because mortgage spreads are better in 2025 than in the past two years.

Conclusion

While today’s job openings report wasn’t terrible, it was soft enough to lower bond yields. This will be the last job openings report before the next Fed meeting and the Fed has emphasized this data point significantly over the years.

The labor market is not showing signs of breaking down, but it lacks a solid foundation, as manufacturing and residential jobs are currently being lost. Without the influx of AI-driven investment into the economy, the labor data would likely be in a worse state. We will see what the upcoming reports reveal, but beating the three-month average of 35,000 job growth this Friday shouldn’t be too difficult.

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