In a surprise move over the weekend, the U.S. and China agreed to ease tariffs for 90 days, leading to an unexpected jolt in the bond market. The 10-year Treasury yield jumped 8 basis points overnight, hitting levels we haven’t seen since April 11th. This sharp move was triggered by news that U.S. import tariffs will be lowered to 30% and export tariffs to 10% during the temporary reprieve—figures that are still historically high but more moderate than markets had feared.
Why does this matter? Because bond yields and mortgage rates often move in lockstep. When yields rise, so do borrowing costs.
While the markets are breathing a short sigh of relief, there’s still a cloud of uncertainty ahead. These “pauses” in tariff pressure are just that—pauses. There’s no clear path forward yet, and the risk of even higher long-term tariffs still looms. That means inflationary pressure could persist, and central banks (including the Fed) are watching closely to decide how to respond.
Here’s what to watch next:
-
Mortgage Rates: Expect more volatility. If yields continue to climb, mortgage rates could follow suit.
-
Investor Behavior: Global demand for U.S. Treasuries could soften if uncertainty increases, putting even more upward pressure on rates.
-
Economic Growth: These tariffs—even temporarily reduced—still represent a significant strain on trade. A slowdown in growth could eventually reverse rate spikes, but timing is unclear.
This 90-day pause gives us breathing room, but it doesn’t remove the risk. If you’re thinking of locking in a rate or making a move—whether refinancing, purchasing, or investing—now may be the window before things shift again.