1. The U.S dollar shot up
This was expected: after the announcement, the dollar should have risen. However, as deals were made, the dollar, which was trading around 110, gradually declined over the day. One issue with trade wars is that a strong U.S. dollar can make it more difficult to export goods globally.
2. The 10-year yield spiked and then fell
The real excitement took place in the bond market, where the 10-year yield spiked to around 4.58%. However, it then declined after news broke that the President was set to meet with the leaders of Mexico and Canada. The yield dropped to as low as 4.47% before returning to a mostly flat position as I write this article.
3. Lumber and oil spiked and then fell
Oil and lumber prices initially rose with the discussion of tariffs. However, as the day went on, both began to decline, particularly after reports emerged that a deal with Mexico was being negotiated and that the implementation of the tariffs would be postponed by a month.
4. Mortgage rates remain flat
Despite the numerous headlines last week and today, mortgage rates have remained largely unchanged, as I discussed in this week’s Housing Market Tracker. Today’s economic data was also positive; both manufacturing and GDP figures were solid. However, the ongoing discussions about the trade war overshadowed these economic indicators, causing them to take a back seat in the news.
I understand that there has been a lot of drama lately. However, as we’ve discussed many times, everyone will need to adapt to extreme headlines without panicking. More importantly for mortgage rates, we need to focus on jobs week, as labor issues are more critical for rates than inflation. On today’s podcast, I discuss the general topic of tariffs, and we’ll continue to dive deeper into it as we examine the jobs data this week to make sense of everything. So, buckle up — it’s only Monday!
