Although rates declined for a second consecutive day, they still ended the week higher as lingering inflation concerns outweighed encouraging data. The yield on the 10-year Treasury slipped two basis points on Friday, finishing at 4.44%, but remained seven basis points above the prior week’s close.
- Meanwhile, Mortgage News Daily reported mortgage rates ending the week at 6.92%, up three basis points from the week before.
Why Did Rates Rise? Persistent worries about price and supply shocks from tariffs continue to weigh on investor sentiment. Federal Reserve Chair Jerome Powell underscored those concerns on Thursday, speaking at the Thomas Laubach Research Conference. Powell noted, “Higher real rates may also reflect the possibility that inflation could be more volatile going forward than during the inter-crisis period of the 2010s.”
- Powell also referenced the supply shock concerns, “We may be entering a period of more frequent and potentially more persistent supply shocks — a difficult challenge for the economy and for central banks,”
Inflation Data: Powell’s comments came on the same day new data showed producer prices dropped 0.5% in April—the sharpest decline since the early days of the pandemic—while retail sales rose slightly more than expected.
This Week: It’s a light week for economic data, but market attention is likely to focus on whether Republicans can pass a budget bill—and which provisions make the final cut—as those outcomes could influence rate movements.
