Monday's markets still felt the reverb from Friday's wretched jobs reports. The final determinant may be Thursday's U.S. CPI report, but at least one Fed cut is already baked into the cake.

If there's one MortgageLogic.news story that should be circled, highlighted, and laminated, this is it.

What follows is a cornerstone of mortgage planning, and that's no exaggeration, because by ignoring it, a mortgage advisor has failed their clients. No ifs, ands, or buts—just a lot of awkward silence at renewal time.

It's a concept that baffles all too many in our business, until someone translates it into plain English. Well, here is that explanation, in a way you've never heard before, offered in the hope it sharpens your ability to serve clients.

Friday changed the outlook

We'll start with last week's rate action because it's illustrative of a key point.

Friday's employment train wreck sent yields tumbling and cranked the sentiment knob almost all the way to "#dovish#."

That’s quite a pivot from the recent focus on inflation and fiscal overspending.

In fact, it wasn't long ago that overnight index swaps (#OIS#) weren't even pricing in half a rate cut, let alone the 2+ priced in today.

It makes a sane person wonder, what good are policy rate derivatives for forecasting if they can be this wrong, this fast?

Every mortgage advisor worth their credentials has to grasp the answer, or they’re effectively giving clients directions while blindfolded.

Predicting rates is not the point

Friday's unsavoury jobs data—on each side of the border—sent yields tumbling and BoC rate cut probabilities soaring. The conversation quickly shifted from "will they cut" to "how much will they cut?"

In the latest edition of 'bad news is good news,' labour data disappointed on both sides of the border today. That's little reason to celebrate, unless you're well-qualified and need a mortgage.

Canada's bond market on Thursday felt like everyone collectively inhaled and decided not to exhale until Friday’s job numbers dropped.

For the BoC, a surprise labour reading could tip the scales toward more rate relief on September 17—or another six weeks of being on pause.

South of the border, a Fed cut looks as certain as tomorrow. Weak labour data would just be extra ammunition for U.S. rate doves.

Tuesday’s yield comeback had the lifespan of a mayfly. Rates retraced all of those gains on Wednesday before sliding to multi-month lows.

Blanket appraisals have been widely cast as financial boogeymen, attacked with overblown claims about their so-called danger. Fortunately, however, our bank regulator takes a more practical view. At Scotiabank's Financials Summit on Wednesday, OSFI head Peter Routledge put blanket appraisals in perspective.

Tuesday saw a small snapback in bonds, with 5-year yields reclaiming about two-thirds of what they lost on Friday. Investors were in a bearish mood worldwide, with multiple long bond yields making multi-decade highs.