May 27, 2025
We have this theory about the markets. The markets move sometimes with no rhyme or reason, but after the movement happens, we have high-paid analysts tell us why the markets made that movement. And they are very logical arguments – nothing like an alien spaceship was sighted. The next day the markets move in the opposite direction, and we have another post-movement explanation. And the cycle continues with the analysts earning their huge paychecks.
This year we have seen plenty of movement in the markets – both stocks and bonds. But this time the explanation is quite clear. The announcement of tariffs caused the stock market to sink and every time there is a pause or a trade agreement, the stock market bounces right back. There is no need for expert analysis in this regard. What is not so clear is the movement of interest rates in relation to the tariff news.
It appears interest rates were going down at the outset of the tariff announcement. This made sense because many were predicting that these tariffs could cause a recession. But then interest rates stopped going down because there was a fear that tariffs would increase inflation and, in combination with the slower economy, stagflation would result. But when progress towards an easing of the tariffs on China was announced, the stock market rallied, and interest rates rose. Shouldn’t rates come down if there are fewer tariffs and less of a chance of increased inflation? We are genuinely confused, and it appears so is the bond market. Certainly, the effect of tariffs on interest rates is not clear, and the lack of tariffs appear to give us even less clarity.
Source: Origination Pro
We are your local neighborhood mortgage loan experts. We live and work in Astoria, Queens NY and surrounding neighborhoods and are dedicated to seeing our community grow and prosper.
AMERIMUTUAL MORTGAGE (NMLS# 148447) Address: 18-33 41st Street, 2nd Floor, Astoria, NY 11105 Tel: (718) 943-9200 Fax: (718) 204 – 0657