Small Events Can Shift the Market

It appears that the terrific few weeks of lower rates & a moderately expanding economy were slightly shifted with the global issue of tariffs. But not by much it appears as mortgage rates remain steady for now.

However, the initial reaction we have witnessed reminds us that it only takes one little — or big — thing or event to upset the apple cart. Natural disasters, political events, international tensions, and more, have the ability to put a charge into the economy and the markets. Thus, the word tariff can be very ugly, or it can just be a gentle reminder. Only time will tell. 

Now, the issue of tariffs had been thrown around before as part of the many trade discussions which have taken place in the past few years. Sometimes the threat just turns out just to be part of negotiating tactics. Or, the tariffs implemented are not as extensive as threatened. In these cases, the markets have quieted down, and the economy has moved along its merry way. It has been about two weeks since the word was presented recently, and in this case the drama has continued mostly in the press. 

After all that rates moved lower for the third straight week, but showed signs of leveling off. For the week ending May 16, Freddie Mac announced that 30-year fixed rates fell to 4.07% from 4.10% the previous week. The average for 15-year loans decreased to 3.53% and the average for five-year ARMs moved up to 3.66%. A year ago, 30-year fixed rates averaged 4.21%, over 0.5% higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac — “Modestly weaker consumer spending and manufacturing data, along with continued jitters around trade policy, caused interest rates to decline throughout the yield curve. While signals from the financial markets are flashing caution signs, the real economy remains on solid ground with steady job growth and five-decade low unemployment rates, which will drive up home sales this summer.”