TARIFF WATCH CONTINUES

The stock and bond markets continue to be on a close tariff watch, waiting for any indication of progress toward a trade deal with China or overall compromise in strategy for the Trump administration. Bond yields and mortgage rates were helped entering the week by news of tariff exemptions for smart phones coming in from China, and rates remained relatively calm for the remainder of the week, giving a much-needed breather. But it is hard to escape a full week without drama, and it came in the form of comments from Trump on Thursday criticizing Fed Chair Jerome Powell, stating that “his termination cannot come soon enough”. The Fed Chair is independent from the executive branch and not subject to termination by the President, but nonetheless, this just adds another layer of uncertainty to the markets forecast. Until there is more clarity, look for bond yields and mortgage rates to struggle to achieve meaningfully lower levels.

On the economic report front, it’s a relatively quiet week. There are a number of corporate earnings reports due out, so weaker results could signal growing recessionary risks. Look for mortgage rates to remain choppy as the competing forces of recession fears (pushing rates lower) and potential inflation (pushing rates higher) will be playing out over the next several weeks

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Home Loan Rate Volatility: HIGH
Home Loan Rate Trent: SLIGHTLY HIGHER