{"id":15011,"date":"2025-05-12T20:40:49","date_gmt":"2025-05-12T20:40:49","guid":{"rendered":"https:\/\/finderica.com\/?p=15011"},"modified":"2025-05-12T20:40:49","modified_gmt":"2025-05-12T20:40:49","slug":"mortgage-rates-moderately-higher-as-china-trade-deal-reached","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=15011","title":{"rendered":"Mortgage Rates Moderately Higher as China Trade Deal Reached"},"content":{"rendered":"
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Over the weekend, the United States and China reached a temporary deal to cut tariffs tremendously.<\/p>\n

Instead of an astronomical 145% rate, the U.S. will now impose a much more reasonable 30% rate on imports from China.<\/p>\n

This should get business (and ships) moving again, though it should be noted that it\u2019s only a 90-day pause.<\/p>\n

Investors cheered the news, believing more severe economic fallout such as a recession could now be averted.<\/p>\n

But the risk-on move has hurt bonds, and by nature mortgage rates, which have seen reduced demand in the process.<\/p>\n

Risk-On Trade Means Mortgage Rates Might Go Higher<\/h2>\n

\"weekly<\/p>\n

At last glance, the 10-year bond yield was<\/a> about 20 basis points (bps) higher than it was before the trade deals began being reported last week.<\/p>\n

We got a U.K. trade deal on May 8th, which resulted in a bump, followed by a China deal today<\/a>, which led to another bump up.<\/p>\n

Mortgage rates correlate very well with the 10-year bond yield, and as such have risen a bit as well.<\/p>\n

However, because of the trade deals and the perceived reduction in volatility, mortgage spreads have improved to offset those gains.<\/p>\n

So some of the increase you\u2019d expect from higher bond yields means mortgage rates aren\u2019t actually much higher.<\/p>\n

Ultimately, the 30-year fixed has been pretty flat over the past week, at least according to MND<\/a>.<\/p>\n

We\u2019re basically just hovering around 6.875% to 6.90%, where we otherwise might be pushing 7% again.<\/p>\n

In other words, the trade deals are semi-neutral for mortgage rates at this juncture.<\/strong><\/p>\n

The market is kind of digesting it as a return to normalcy, which isn\u2019t majorly bullish or bearish for mortgage rates.<\/p>\n

At the same time, it\u2019s important to remember this a temporary deal and before long, folks will be asking questions about what happens next.<\/p>\n

This could mean relatively flat interest rates for the rest of the second quarter as investors take a wait-and-see approach.<\/p>\n

Economic Data Will Matter Again, with an Asterisk<\/h2>\n

\"10-year<\/p>\n

With the trade tensions and tariffs now off the boil, economic data will retake center stage.<\/p>\n

This means things that normally matter to mortgage rates, like the jobs report and the CPI report will dictate the direction of rates again.<\/p>\n

Speaking of, CPI is due out tomorrow and that will be something to watch to determine how inflation is doing.<\/p>\n

The one problem though is because of the past couple months, we might see anomalies in the economic data.<\/p>\n

Will we see an uptick in inflation related to supply chain disruptions? Will we see an increase in unemployment?<\/p>\n

What will economists make of it? Will they write it off as a temporary trade-related issue and not something to take too seriously?<\/p>\n

And what about the Fed? How will Jerome Powell and company look at this data as it is unveiled?<\/p>\n

If anything, it could push out any expected policy decisions as the data smooths and tells a clearer story.<\/p>\n

That too could mean stubbornly flat mortgage rates for the next few months, at a key time of the year when home buying is historically strongest.<\/p>\n

It will also dampen refinance activity, especially rate and term refinances that are harder to pencil for recent home buyers.<\/p>\n

But Mortgage Rates Could Still Trend Lower as the Year Progresses<\/h2>\n