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Tariffs
| Investors were focused on tariffs this week. Higher tariffs reduced the outlook for global economic growth, which was positive for mortgage markets and negative for stocks. The major economic data caused little reaction. As a result, mortgage rates ended the week at their lowest levels since October. |
| On Wednesday afternoon, President Trump announced that tariffs will be increased for many countries. China quickly responded by raising tariffs on U.S. goods. The direct effect on mortgage rates is that higher tariffs will raise prices, adding to current inflation levels. However, investors anticipate that this negative influence will be more than offset by the resulting reduction in global economic growth, which will reduce future inflationary pressures. Longer-term, the impact of higher tariffs will be determined by their magnitude and duration, which likely will depend on the outcome of negotiations with other countries. The key Employment report revealed that the economy gained 228,000 jobs in March, well above the consensus forecast of 140,000. Sectors displaying particular strength included health care, retail, and transportation. The unemployment rate unexpectedly increased from 4.1% to 4.2%. Average hourly earnings, an indicator of wage growth, were 3.8% higher than a year ago, down from an annual rate of 4.0% last month. Two other significant economic reports released this week by the Institute of Supply Management fell short of expectations. The ISM national services sector index dropped to 50.8, well below the consensus forecast of 53.0 and the lowest level since June 2024. The national manufacturing index declined to 49.0, also below the consensus. Readings above 50 indicate an expansion in the sectors and below 50 a contraction. Service companies continue to outperform manufacturers. In a speech on Friday, Chair Powell said that the Fed faces a “highly uncertain outlook” because of the new tariff policies, which are expected to raise inflation and lower economic growth. He explained that one challenge for the Fed is determining whether the tariffs will cause a “one-time increase” in the price level or an “ongoing inflation problem.” As a result, Powell concluded that officials will need to wait and see the effects of the tariff policies to decide the appropriate path for future monetary policy. Investors currently anticipate that the Fed will reduce the federal funds rate in June. |
| Week Ahead |
| Investors will continue to look for additional information about tariff policies. For economic reports, the main event will be CPI on Thursday. The Consumer Price Index (CPI) is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services. The Producer Price Index (PPI), another monthly inflation indicator, will be released on Friday. |
| Calendar |
| Wed 04/09 Fed Minutes Thu 04/10 CPI Thu 04/10 Jobless Claims Fri 04/11 PPI |
weekly Changes
| Mortgage Rates | fell | 0.25 |
| Dow | fell | 2,000 |
| NASDAQ | fell | 1,300 |
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| CONTACT ME Johnathan Barber Originating Branch Manager M 513-518-6318 D 513-991-5938 W ccm.com/johnathan-barber E johnathan.barber@ccm.com CrossCountry Mortgage, LLC 130 Tri County Parkway, Suite 108 Cincinnati, OH 45246 Personal NMLS240526 Branch NMLS2588310 Company NMLS3029 Min FICO: 620 TEAM BARBER CROSS COUNTRY MORTGAGE |