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MIG Market Watch, March 31st, 2025
Posted by : Moneek-2
Market Comment
Mortgage bond prices finished the week lower which put upward pressure on rates. Rates worsened gradually throughout the week with only a slight respite Friday morning. Tariffs dominated headlines and impacted stocks and bonds. Some of the data showed signs of weakness with slight price pressures. Consumer confidence was 92.9 vs 94 and new home sales were 676K vs 680K. Durable goods orders surprised to the upside with a reading of 0.9% vs the expected 0.1% decline. Q4 GDP rose 2.4% vs 2.3%. Weekly jobless claims were 224K vs 225K. Income rose 0.8% vs 0.4%. Spending was up 0.4% vs 0.5%. Core PCE inflation rose 0.4% vs 0.3%. Mortgage interest rates finished the week worse by approximately 1/4 to 3/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| ISM Index | Tuesday, April 1, 10:00 am, et | 47.8 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Construction Spending | Tuesday, April 1, 10:00 am, et | Up 0.2% | Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| ADP Employment | Wednesday, April 2, 8:15 am, et | 120K | Important. An indication of employment. Weakness may bring lower rates. |
| Factory Orders | Wednesday, April 2, 10:00 am, et | Up 0.5% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, April 3, 8:30 am, et | 225K | Important. An indication of employment. Higher claims may result in lower rates. |
| Trade Data | Thursday, April 3, 8:30 am, et | $110B | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment | Friday, April 4, 8:30 am, et | 4.2%, Payrolls +128K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
Tariff Uncertainty
The US Administration’s various tariffs have ignited fears of trade wars and have sparked widespread economic uncertainty and debate about their broader implications. Stocks have experienced heavy selling pressure and the bond market hasn’t escaped the volatility either. Tariffs can fan inflation fears as the price of materials will likely increase. In addition, tariffs can result in other countries retaliating and placing their own tariffs on goods the U.S. exports. Inflation, real or perceived, erodes the value of fixed income investments such as mortgage-backed securities. This causes prices to fall and rates to rise.
The outcome hinges on several variables: the scale and duration of the tariffs, whether they escalate into a broader trade war, and how central banks prioritize inflation versus growth. Short-term volatility is likely, with mortgage rates fluctuating as markets digest policy developments. Some analysts suggest that if tariffs are used as a negotiating tactic and quickly scaled back, their impact might be minimal, allowing rates to stabilize or decline. For now, homebuyers face a challenging environment of elevated rates, with experts advising caution and flexibility in financial planning as the situation evolves.
