Mortgage Rates Unimpacted by New Executive Orders
Mortgage rates are driven predominantly by the bond market and bonds were able to clear up a few curiosities on inauguration day. Specifically, traders expected multiple executive orders with several focusing on proposed tariffs. While history suggests the conventional wisdom may be faulty, the general belief is that tariffs increase inflation. Considering inflation correlates with higher rates, there was some relief in rates when the executive orders concerning tariffs turned out to be less aggressive than expected. In not so many words, the president ordered various agencies to asses trade agreements/deficits and recommend measures to address them, such as tariffs. Bonds were thus able to hold onto the gains from last week with some additional improvement today. The average
Homebuilder Confidence Consolidation Continues
While it would be technically accurate to point out a slight increase in January's homebuilder confidence (officially the National Association of Homebuilders Housing Market Index or HMI ), the type of movement we've seen in the past 2 years is better characterized as "incidental" in the bigger picture. As with most housing-related metrics, HMI plummeted in 2022 as interest rates skyrocketed. It's been broadly sideways ever since with the swings between highs and lows getting smaller and smaller. In market jargon, this is a textbook example of "consolidation"--something that can signal an eventual reversal back toward higher levels or a renewed slide to lower lows. Absent another catastrophic episode like the Great Financial Crisis, it's not clear what would make builders
Mortgage Rates Back Down to Lowest Levels in 2 Weeks
2 Straight Days of Gains?! Not only have bonds managed to pull off a feat rarely seen in recent memory (back to back days of solid gains), but the total drop in yields is the biggest since August 2024. Today's improvement wasn't nearly as big as yesterday's CPI-driven rally, but it would have been very strange if it had been. The data and events on tap didn't have the street cred to drive such craziness. Modestly weaker retail sales helped yields level off after overnight weakness, but comments from Fed's Waller and Treasury Secretary nominee Bessent accounted for most of the day's downward movement in yields.
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