Congratulations to “The Shape of Water” for winning big at the Academy Awards last night. I haven’t seen the movie but isn’t the shape of water simply the shape of its container?
Mortgage rates oscillated last week but are mostly unchanged from last Monday. Fortunately the yield on the US 10-year treasury note remains below 2.91% which remains a critical technical level and one we’ll continue to monitor.
Tariffs and inflation
Last week President Trump announced proposed tariffs which would protect US steel manufacturers. Higher prices for steel will likely pressure inflation higher and as we know inflation is the primary driver of mortgage rates.
As sentiment shifts around this issue I expect interest rates to react. If it looks more likely that tariffs will be imposed mortgage rates will worsen and vice versa.
Jobs, Jobs, Jobs (and inflation)
This Friday we’ll get the all-important jobs report from the Bureau of Labor Statistics. The markets are expecting +200,000 new jobs but lately interest rates have reacted more to the average hourly earnings number than to jobs. Since the labor market is tight economists are watching wages to determine if companies will have to pay more in labor costs which can lead to wage-based inflation.
The remainder of the economic calendar is fairly light.
As long as the US 10-year treasury notes remains at or below 2.91% I will continue to float.
Current Outlook: cautiously floating