What’s Happening?
All news below is color-coded as “good“, “bad“, or “neutral” for mortgage rates.
April was a chaotic month that ended with rates only slightly elevated despite the tariff calamity early in the month.
•New Tariffs (good for rates, then very bad, but then good again, but not as good as before): The big market mover in April was tariffs. President Trump announced his new Tariff plan on Wednesday, April 2nd (strategically after markets closed), and fearing a trade war between major world economies, stocks and mortgage rates fell.
However, on the following Monday, mortgage rates rose without a clear explanation. 1 week after announcing these tariffs, a 90-day pause was announced for most tariffs (except those on China), and rates fell slowly, settling slightly above their initial levels. Stock markets remain at lower valuations than before the announced tariffs.
News is moving quickly on tariffs, a bit hard to track as we’re following the day-to-day news. As the news changes, so too will rates and stock market valuations.
•Stock markets are still dropping (neutral for rates): The S&P 500 is down YTD by about 6% and was down by over 10% at times. This is fueled by a suspected recession and uncertainty around tariffs. When markets drop, we typically see a “flight to safety,” which usually means bonds (including mortgage-backed securities). As investors buy bonds, that pushes the yield (and rates) down. However, that correlation we usually see is failing us recently, so I’ve marked this as “neutral for rates” at the moment.
•Jobs Report (bad for rates): The BLS March Labor Report signaled a stronger-than-expected labor market.
- New jobs came in much higher than expected at 228k new jobs; 140k were expected. Strong jobs data adds upward pressure to rates.
- Unemployment year-over-year rose from 4.1% to 4.2%. Weak labor data adds downward pressure on rates.
•Inflation Report (good for rates): The March CPI (Consumer Price Index) report came in at 2.4% year-over-year, compared to 2.8% in last month’s report, which is favorable and would typically push rates down in a normal week.
