Overview: The primary influence on mortgage rates over the past week was a policy change from the Trump administration concerning tariffs. On several days, headlines about the issue caused a lot of volatility, but the net effect of the news was small. The week’s economic data also had only a minor impact, and mortgage rates ended the week with little change.
Tariffs have mixed effects on mortgage rates. Since they raise the price of goods imported into the U.S., they can lead to higher inflation, which is unfavorable for rates. However, they also tend to slow economic growth, especially if other countries retaliate, which reduces future inflationary pressures. While nearly all investors view tariffs as negative for the stock market, it is very difficult to predict the overall impact on mortgage rates.
On Thursday, President Trump announced that he would impose global tariffs on all steel and aluminum imported into the U.S. and that he would not back down. Many top officials opposed the policy change, and House Speaker Paul Ryan said on Monday that he was "urging" the Trump administration not to implement new tariffs. Since then, Trump has appeared to be more open to tariffs targeted to specific countries. The next major news item came when White House chief economic advisor Gary Cohn resigned, reportedly due to his strong opposition to the tariffs. Cohn is well respected and his departure is viewed by most investors as a major loss for the Trump administration.
The recent data revealed that the manufacturing sector has continued to perform well. The Institute for Supply Management (ISM) Services Index unexpectedly climbed to 60.8, which matched the highest level since 2004. Readings above 50 indicate an expansion in the sector.
Looking ahead, the next European Central Bank meeting will take place on Thursday and could influence U.S. mortgage rates. In the U.S., the important monthly Employment Report will be released on Friday. As usual, this data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. The Consumer Price Index inflation data will come out on March 13, and the Retail Sales Report is released on March 14.