A low hire, low fire labor market

The US job market remains in a soft, yet relatively balanced state. December saw just 50,000 jobs added — well below levels typically considered healthy. Yet the unemployment rate improved to 4.4%, from 4.5% prior, reflecting a “low hire/low fire” state of play. The obvious concern is how the Federal Reserve feels is more important, especially if the firing side of the equation were to accelerate.

Despite the weak hiring, the overall stability in the labor market potentially gives the Fed some breathing room in the near term. The market is currently pricing in about two 25 basis-point cuts this year, however, that’s not necessarily the opinion of Fed officials. Governor Miran, a vocal supporter of lower interest rates, argued last week for 150 basis points of cuts this year.

President Trump turned his attention to housing affordability last week, floating such ideas as limiting institutional investor ownership and purchasing $200 billion of mortgage-backed securities to push mortgage rates lower. Of course, the president has not hidden his desire for the Fed to lower interest rates, partially to improve mortgage costs. However, despite three successive rate cuts to end 2025, the 10-year Treasury yield (a more reliable benchmark for mortgage rates) sits at roughly the same level as in September.

The first full week of 2026 opened with a flurry of economic and geopolitical developments, with many more on the horizon. Among the events to watch this month: the Supreme Court ruling on the legality of US tariffs and the Trump administration’s nomination of the next Fed chair.