Rates Seesaw After Partial Shutdown and Bad Jobs Data

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The Short Lived Shutdown

The federal government experienced a brief shutdown that ended February 3, 2026, with most agencies funded through September. However, the Department of Homeland Security only received funding until February 13, setting up another potential partial shutdown as Democrats and Republicans remain far apart on immigration enforcement reforms. Sen. John Fetterman has said he "absolutely would expect" the government to shut down again.

Government shutdowns are bad news for mortgage rates because they create uncertainty in financial markets. Shutdowns delay critical economic reports the Federal Reserve needs to make policy decisions, cause volatility as investors flee to safety, and undermine consumer confidence. When the Fed can't access reliable data, it typically delays rate cuts—keeping mortgage rates elevated longer than necessary. If the government can't agree on next steps by the February 13 deadline expect more rate volatility.

Labor Market Continues to Cool

The government shutdown that began February 1, 2026 disrupted critical economic data releases, with the Bureau of Labor Statistics postponing the most important data (the January jobs report) to February 11th . However, the ADP private payrolls report and the job openings report gave us a pretty clear picture that the labor market is still deteriorating.

What to expect this week?

This week brings critical economic data that will determine where mortgage rates head next.

Tuesday, February 10 kicks things off with retail sales data for December, expected to show 0.3% growth. This will reveal whether consumer spending held up through year-end or started cracking under economic pressure. Weak retail sales = another reason for the Fed to cut.

Wednesday, February 11 delivers the delayed January employment report at 8:30am. Markets expect just 55,000 jobs added with unemployment holding at 4.4%—both weak enough to support the Fed's rate-cut pivot. The same morning brings hourly wages data, expected to show cooling wage growth at 0.3% month-over-month (3.7% year-over-year).

Thursday, February 12 brings initial jobless claims (expected at 222,000) and existing home sales data (4.15 million), offering additional insight into labor market strength and housing demand.

Friday, February 13 is another big day: CPI hits at 8:30am, with core inflation expected to hold at 0.3% month-over-month (2.5% year-over-year). A softer reading would be excellent for mortgage rates.

Bottom line: If inflation stays soft, jobs remain weak, and we avoid a shutdown, expect mortgage rates to drift lower through the end of the week. But a hot CPI print or shutdown chaos could quickly reverse that trend.