Tariffs, Inflation & Mortgage Rates: What You Need to Know
This week was anything but quiet for the economy, though mortgage rates remained relatively steady by the end of it. Between trade news and fresh inflation data, the markets were pulled in opposite directions—making it a week worth unpacking.
Tariffs Take Center Stage
Tensions between the U.S. and China eased slightly as both countries agreed to a 90-day pause on most tariffs. While that boosted optimism around global growth (good news for stocks), it also raised concerns about future inflation (less ideal for mortgage rates). The result? A bump in bond yields early in the week.
Inflation Data Offers Relief
Fortunately, April's inflation data helped steady things. The Consumer Price Index (CPI)—a key inflation gauge—came in slightly lower than expected. Core CPI (which excludes food and energy) rose 2.8% year-over-year, holding at its lowest level since March 2021. While still above the Fed’s target of 2%, it’s a far cry from the peak of 6.6% in September 2022.
Shelter costs remain sticky, making it tough to bring inflation all the way down. But there was some relief: used car prices declined for a second month, and new car prices held flat.
Another data point—the Producer Price Index (PPI)—also surprised to the downside. Core PPI fell 0.4% from March, well below the forecasted +0.3%, suggesting lower input costs for businesses. While PPI doesn’t carry as much weight as CPI, it’s another sign inflation may be cooling.
Retail Sales: A Mixed Bag
Retail spending surged 1.7% in March as consumers rushed to make purchases ahead of potential price hikes. But in April, sales settled down with a modest 0.1% increase—right in line with expectations. Home improvement and electronics stores led the gains, while department stores and sporting goods retailers saw declines.
Bottom Line:
While the market remains sensitive to inflation and trade headlines, recent data suggests that inflationary pressures are easing—though not entirely gone. Mortgage rates may remain range-bound in the short term, but expect continued volatility as new data rolls in.
Real estate doesn’t need to be confusing—especially not with me in your corner. Reach out anytime if you're thinking about making a move.
