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Rates Rise on Tentative Trade Optimism


Mortgage rates rose this week, riding positive, albeit tentative developments in Brexit and the U.S.-China trade conflict to their highest levels since last spring.

Rates moved steadily higher on Thursday and Friday as markets anticipated the announcement of progress in the U.S.-China trade discussions. Sure enough, the two nations did come to a tentative, partial agreement, which sent bond yields, and thus mortgage rates, upward, at least initially. A lack of details surrounding the agreement pulled rates back before optimism emerging from Brexit proceedings nudged them up again.

Geopolitics and trade-related uncertainty have generally been the strongest determinants for the substantial drop in mortgage rates this year, so any progress in those areas has the potential to push rates sharply upward. Indeed, after a brief hiatus, it appears that geopolitical developments are again affecting mortgage rate movements — even more than economic data releases are. Bond yields barely budged on Wednesday, despite U.S. retail sales figures falling for the first time in seven months.

It's a pivotal moment in these two major geopolitical stories, so it's likely that more volatility for mortgage rates is on the horizon.

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