My bold prediction last weekwas right! Mortgage rates fell quite a bit last week after the big jump we saw following "Liberation Day". The reason - for the most part - is that we got a breather from tariffs dominating the headlines. 

The average rate on a 30-year fixed rate conventional loan dropped to 6.78%  - down from 6.895% just the week before. A great (and welcomed) recovery from the jump we saw the week prior. Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! An example of the Friday rate texts (and our rates as of 4/18/25) is at the bottom of this email.

Powell's Tightrope
 
The biggest news from last week, which is still having spillover effects today, came from Powell's speech at an event hosted by the Economic Club of Chicago.

Powell reiterated that “our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.” AKA we aren't cutting rates as long as tariffs are hanging around to cause price increases.

While the Fed has a dual mandate of lowering inflation and maximizing employment, Powell says that "without price stability, we cannot achieve the long periods of strong labor-market conditions that benefit all Americans.” So, price stability is more important that low unemployment.

“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said. The entire speech was basically a rebuke of Trump's tariff policies and to let the world know that the Fed will not cut rates for as long as possible while tariffs are in play.

Obviously, Trump did not take kindly to Powell's speech. Trump posted on TruthSocial “Powell’s termination cannot come fast enough!”

Whether or not the president can actually fire the Fed Chair is the big question. Powell says the Federal Reserve's “independence is a matter of law" and the world has operated based on that belief for a very long time. The markets certainly do not like uncertainty and Trump - with his words and actions - is causing uncertainty. If the president can fire a previously assumed independent body, it makes the US less of a safe haven for assets, which is one reason why we are seeing stocks fall and rates rise on this Monday, April 21st.

The hangover effect could be long lasting if these 2 don't learn how to play nice, and unless Powell comes out publicly to say he's ready to cut rates, that may not happen any time soon.

Retail Sales Surprise
 
Retail sales came in better than expected last week and many believe that it's due to consumers trying to buy goods before the tariffs arrive. Anecdotally, I have a few friends who moved their decision to buy a car up by a few months because they didn't want to worry about the price of their car skyrocketing due to tariffs. Apparently, this feeling was felt across America.

"It's hard to feel good about Americans panic buying cars as consumer confidence craters," said Bill Adams, chief economist at Comerica Bank. "The economic outlook is in flux with large changes to trade policy nearly every day. Businesses selling cars, appliances and electronics are likely to see less demand in the next month or two as panic buying ends."

We'll see what happens with retail sales data in the coming months to get a better understanding of how tariffs (and the economy generally) are affecting retail sales.

Rate Cut Predictions

Despite what Powell has said, June 18th still looks like the first time we'll see a rate cut this year.  Of course, there's plenty of time for that to change. We still have several inflation and employment reporting dates to get through before June 18th, and who knows what will happen between Powell and Trump by then. 

Treasury Secretary Scott Bessent is apparently against any idea that may involve firing Powell, which may help the markets in the future to gain confidence, but it isn't doing much right now.