Mortgage Insider April 2025

Stagflation

What a rollercoaster couple of weeks. What is clear is that markets do not like uncertainty.

When President Trump first announced his ambitious world tariff plan, the 10-year Treasury bond yield went down to as low as 3.80. He made it quite clear that driving down interest rates and rejuvenating the housing market, as well as corporate investment, was one of his first priorities in his new term.

We all saw what happened to the stock market after the tariff announcement. While he may or may not have anticipated that, Trump definitely did not anticipate the wild swing the other way in bond markets. The bellwether 10-year Tbond whipsawed as high as 4.59 late last week, a 80 point increase in less than two weeks. This volatility is unheard of in the usually stable US bond markets.

The data of who is selling takes months to analyze, so we won’t know for sure what caused this massive sell-off until June.  Experts speculate that is was some combination of investors anticipation of higher interest rates, panic selling to cover losses, and perhaps foreign governments dumping their US holdings. If in fact foreign governments and life insurers are selling, this is a very troubling development as the US dollar has been the de facto safe haven for the world since post-WW2. The world has counted on the US to provide a stable economic environment and why the US dollar has largely been regarded as the safest investment in the world.   In turn, we benefit greatly as it provides financing for our large and robust economy.  The largest holders of US debt are Japan and China and if either decides US Treasuries are no longer safe and begin selling, this could have disastrous consequences for our economy, as bond yields would spike and our burgeoning debt payments would balloon even more.

While there is no doubt that the US needs to renegotiate some unfair trade deals with other countries, the initial shotgun approach on announcing tariffs on basically every country in the world was extremely risky and backfired.  The world looks to the US for clear and coherent communication. If we want to continue to be the economic leader of the world, we need our policymakers to provide stabilization to the markets.

For an in-depth look at what is causing the US Treasury sell-off:
https://www.cnbc.com/2025/04/15/us-treasurys-selloff-what-happened-and-why.html?&qsearchterm=trump%20tariffs%20drove

Housing Opportunity

With current stock market volatility and rising interest rates, we are in a strong buyer’s market. If you are lucky enough to be in a position to buy, you can find some excellent deals out there. Sellers are especially looking for buyers with the ability to close quickly. While doing an all-cash offer is one way to go, alternatively you can utilize CB Investments to obtain a mortgage and do a 15-day close. Through our preferred relationship with certain investors, we can guarantee a 15-day close when needed to secure a deal.