Macro

President Trump announced a 10% baseline tariff on all U.S. imports and higher 'reciprocal' tariffs on countries including China (34%), the EU (20%), and Japan (24%), escalating global trade tensions. The move, set to take effect in early April, risks triggering retaliatory measures and a trade war, with economists warning of higher consumer prices, reduced manufacturing competitiveness, and potential market instability.

Mortgage rates have edged up to a one-year high, with the average 30-year fixed rate at 6.69% as of August 5, up three basis points from the prior week and marking the first time in 44 weeks that rates are higher than a year earlier. The 15-year fixed rate dipped slightly to 6.01%. Rates remain closely tied to the 10-year Treasury yield, which closed at 4.62% on August 5, with the spread between the two now at 2.07 percentage points. The Federal Reserve has held rates steady in 2026 after three cuts in 2025, but traders still anticipate a quarter-point hike in September. Fannie Mae forecasts rates will stay in the 6.2% to 6.3% range through 2027. High borrowing costs and elevated home prices—median single-family home prices reached $410,700 by Q2 2026—continue to challenge affordability. Experts advise buyers to consider strategies such as fixer-uppers, condos, or rate buydowns rather than waiting for rates to drop, noting that a recession might not bring relief if lower rates boost demand for limited supply.

As of mid-July 2026, mortgage rates have stalled near 6.5%, with Freddie Mac reporting the average 30-year fixed rate at 6.55%—six basis points higher than the previous week. The Federal Reserve, now under Chairman Kevin Warsh, has held rates steady in 2026 after three cuts in 2025, and traders see increasing odds of a rate hike as early as September. Mortgage rates are more closely tied to the 10-year Treasury yield, which closed at 4.55% on July 15. The spread between that yield and the 30-year mortgage rate has narrowed slightly to 2.00 percentage points from 2.28 a year ago, explaining why rates are only modestly lower. With home prices remaining high—the median single-family home sale price reached $405,300 by Q4 2025—and supply constrained, experts advise buyers not to wait for rates to drop below 6% but instead to consider strategies like fixer-uppers, condos, or longer commutes to find affordable options.

As of July 23, 2026, the average 30-year fixed mortgage rate held at 6.58%, up three basis points from the prior week, while the 15-year rate averaged 5.96%. Rates have remained near 6.5% for two months, disappointing borrowers hoping for sub-6% loans. The 10-year Treasury yield, which mortgage rates closely track, closed at 4.55% on July 22, with the spread between mortgage rates and Treasury yields narrowing slightly—now about 2.00 percentage points, down from 2.28 points a year ago—keeping rates only marginally lower than the 6.75% average in July 2025. The Federal Reserve, now chaired by Kevin Warsh, has kept the fed funds rate unchanged in 2026 after three cuts in 2025, with traders increasingly expecting a potential rate hike as soon as September. Analysts advise buyers not to wait for lower rates, as limited housing supply and high home prices—median single-family home prices reached $405,300 by Q4 2025—continue to challenge affordability. Strategies for buyers include considering fixer-uppers, condos, 15-year mortgages, or longer commutes to find affordable options.

President Trump temporarily reduced tariffs to 10% for over 75 countries for 90 days to facilitate trade talks, while sharply increasing China's tariffs to 125% amid escalating trade tensions. The move reversed recent market losses, with the S&P 500 surging 7%, as investors welcomed the de-escalation with most nations despite heightened risks with China.

The U.S. and China agreed to reduce reciprocal tariffs from 125% to 10% for 90 days, maintaining limited duties on fentanyl-related goods, following high-level talks in Switzerland. The de-escalation boosted global markets, with surges in U.S. futures, European indices, and oil prices, signaling relief over eased trade tensions. However, analysts caution the truce may not lead to a lasting resolution, as structural issues and remaining tariffs persist.

A Republican-backed spending bill passed by the Senate would eliminate the $7,500 federal tax credit for new EVs after September 30, impacting consumer incentives and automakers' sales strategies. The move, part of a broader tax package, could slow EV adoption and disproportionately affect middle- and lower-income buyers, with market implications for EV affordability and climate goals.

Mortgage rates are forecast to remain near 6% through 2030, with no return to the 3% lows seen during the pandemic. The base-case forecast combines 10-year Treasury yield projections from Deloitte (3.9% by mid-2027 through 2030), the CBO (4.1–4.3%), and Goldman Sachs (4.5% by 2035), plus a spread of roughly 2 percentage points to 30-year fixed mortgage rates. As of March 5, the 10-year Treasury yield was 4.09% and the 30-year fixed rate was 6.00%, reflecting a spread of 1.91 percentage points. A bull case sees rates near 5% by 2030 if inflation eases and the spread normalizes; a bear case sees rates climbing to 7% by 2027 before easing to 6.6% by 2030 if inflation persists and fiscal deficits widen. The analysis emphasizes that only a severe recession or other major disruption could push rates significantly lower.

JPMorgan CEO Jamie Dimon highlighted recent auto sector bankruptcies, including Tricolor Holdings and First Brands, as early warnings of loose corporate lending standards post-2010. JPMorgan took $170 million in charge-offs from its Tricolor exposure, while other banks like Fifth Third and Jefferies face hundreds of millions in losses, sparking broader concerns about hidden credit risks in leveraged lending markets.