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Watch for News from the Fed Chairman

Last week was dominated by U.S. President Donald Trump's announcements on Canadian tariffs as well as the U.S. budget deficit crossing the $40 trillion mark. We mention this because our clients are barraged by news out of Washington DC. This news can create a lot of uncertainty, which in turn causes people to sometimes “hunker down” or put off making decisions, especially major financial decisions like buying a home. Orion and our brokers totally understand. News of staff reductions at Fannie Mae, the continued war with Iran, and changing weather patterns creating drought and tornadoes around the United States are garnering attention from lenders as well as companies servicing loans.

But brokers should keep their eyes on the horizon and know that, for interest rates, a some what stable employment and inflation picture keeping rates in a somewhat tight range.

The Federal Reserve doesn’t set mortgage rates, nor does the president. But Orion’s brokers know that the same factors that influence our Federal Reserve in keeping our economy stable impact mortgages. Federal Reserve Chair Kevin Warsh and the Federal Open Market Committee remain independent, in theory, despite President Donald Trump’s continued calls for lower interest rates. Last year ex-Chairman Jerome Powell stated, “People can be confident that we’ll continue to keep our heads down, do our work, and make our decisions based on what’s happening in the economy.” Investors hope that remains the case.

Traders are now looking ahead to Federal Reserve Chairman Kevin Warsh’s upcoming speech at Jackson Hole Economic Policy Symposium. Whether or not he has any insights on interest rates remains to be seen. “The rise in bond yields and the Treasury’s purchase sall set the stage for what will be a very important Jackson Hole speech. But it has become apparent that Warsh wants the market to do the tightening instead of the Fed, and that’s really what is happening with the recent surge in bond yields.

With the current Administration, we can expect “headline risk” to permeate the media from now on. These announcements and rumors may move rates, and lending policies, or they may not. No one knows. We can also expect the November elections to dominate the headlines. But Orion and our AEs will continue with our great service, wide-ranging products, and competitive rates regardless of the news that comes across the airwaves.

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