Heading into last week, we expected to be waiting until after the holiday weekend to get a better sense of the prevailing tone in financial markets. If the week of April 7-11 represent tariff-driven panic, last week offered some hope that markets could stabilize in response to a more measured approach from the Trump administration. Those hopes were already looking tenuous last Thursday as Trump unleashed a barrage of criticism at Fed Chair Powell, ultimately suggesting could remove Powell if so desired. Global markets don’t love this narrative, and traded that fact overnight with weakness in the U.S. Dollar, stocks, and longer-term bonds. As Trump doubles down on his anti-Powell rhetoric this morning, stocks are swooning enough to help bonds recover back near unchanged levels.  The just-reported failure to reach a trade deal with Mexico (as well as a conspicuous absence of any major trade deals) is further contributing to the stock market swoon.

In the 1980s I fell off my bike and hurt my knee. I’m telling you this now because we didn’t have social media then. It doesn’t take social media to know that the S&P 500 is down 10 percent for the year, but fortunately “the stock market is not the economy.” As lenders and vendors everywhere focus on people, processes, and technology in trying to help their clients, on a broader scale, things have turned south. The benchmark S&P 500 index has now notched seven negative weeks out of nine, as tariff developments continue to sour sentiment. After several, sometimes confusing, adjustments and clarifications to tariff policy in recent weeks, things were quieter on that front last week. Lenders working with builders took note of one builder’s comments. “This year’s spring selling season started slower than expected, as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence,” Paul Romanowski, CEO of D.R. Horton, the largest homebuilder in the country, said on the recent earnings call. (Today’s podcast can be found here and this week is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s core products unite the people, systems, and stages of the mortgage process. Hear an interview with Planet Home’s Mike Dubeck on managing a company through market cycles and driving business through technology investments.) Software, Products, and Services for Lenders and Brokers

Last week was a hopeful one for interest rates.  The average top tier 30yr fixed mortgage rate fell more than 0.20% from the previous week’s highs as underlying markets took some solace in the absence of major trade war escalations. Despite the solid improvement, the outright level of rates remained elevated compared to most of the past 2 months. In addition, the risk of volatility could not (and cannot) be ruled out when the market is more willing to react to fiscal policy headlines than economic data. The latest headlines involve heavy criticism of Fed Chair Powell on the part of The President. Without any comment on whether that criticism is justified, we can still observe that markets find it unsettling. Traders are expressing that sentiment by pushing stocks lower and rates higher. Mortgage rates jumped fairly sharply today, with the average lender moving up from 6.87% to just under 7.00% for top tier 30yr fixed scenarios.

Unfortunate Market Movement For Unfortunate Reasons

Global financial markets partook in a slow motion train wreck on Monday as investors shunned USD-denominated assets and the dollar itself in response to Trump’s vocal criticism of Fed Chair Powell.  The criticism itself wouldn’t be too tough to deal with, but the prospect of “firing” the Fed Chair seems to figure much more prominently into this edition of Trump vs Powell than it did during Trump’s previous term.  In not so many words, this would be “bad” for both stocks and bonds.  Today wasn’t catastrophic by any means, but the correlated weakness between stocks, bonds and the USD is an important proof of concept. 

Econ Data / Events

Leading Indicators

-0.7 vs -0.5 f’cast, -0.3 prev

Market Movement Recap

10:13 AM Weaker overnight, but pushing back since 8am ET.  MBS down just over an eighth and 10yr up 3bps at 4.355

12:35 PM Nice gains into 1030am, but weaker since then.  MBS now down 9 ticks (.28) and 10yr up 5.1bps at 4.377

01:44 PM weakest levels of the day for MBS with 5.5 coupons down 13 ticks (.41) and 10yr up 7.4bps at 4.40

04:00 PM More new lows.  MBS down half a point and 10yr up 9.2bps at 4.419

Even with various tariff pauses and exemptions, suppliers are raising prices due to ongoing policy uncertainty, and consumers also are altering their behavior.

The state and local tax deduction is a write-off that most Americans will never claim, even in the districts of the lawmakers fighting hardest to increase the tax break, data analyzed by Bloomberg News shows.

The statement posted on social media platform X could reflect policy, politics or both. Clarification was not immediately available at deadline.

Even after posting production losses in two of four quarters last year, independent mortgage bankers made $443 on every loan originated during 2024.

Nearly a quarter of home sellers in March slashed their listing prices, the highest rate of price cutting since 2018 according to a Zillow report.

Don’t Sweat The Modest Weakness

Bonds began the day roughly unchanged and very flat for most of the morning. MBS began falling as we moved into the PM hours, ultimately resulting in a handful of negative reprices, about a quarter point of weakness, and a 4+bp jump in Treasury yields. If the frame of reference is limited to the domestic session, this is a moderate sell-off at best, but in the bigger picture, it was not even worth mentioning, let alone considering as a cause of concern. Bonds are heading into the 3 day weekend at much less alarming levels than last week, and with the the same requirement to wait for clarity on fiscal policies before the next major movement is revealed.

Econ Data / Events

Jobless Claims

215k vs 225k f’cast, 224k prev

Philly Fed

-26.4 vs 2.0 f’cast, 12.5 prev

Philly Fed Prices

51.0 vs 48.3 prev

Philly Fed New Orders

-34.2 vs 8.7 prev

Market Movement Recap

08:43 AM Initially weaker overnight, then reversing into U.S. hours. Slightly stronger after data.  MBS down 1 tick (.03) and 10yr up 0.7bps at 4.285

12:37 PM Weakest levels now.  MBS down an eighth and 10yr up 5.1bps at 4.329