Trump’s Back. Tariffs Are Back. What Does It Mean for Rates, Housing & Your Money?

Well, here we go again.

Trump’s back in office, tariffs are back on the table, and the markets — both financial and housing — are already reacting. The 10-year Treasury yield has been swinging wildly, mortgage rates followed suit, and it’s starting to feel a whole lot like 2018 again. And if you remember how that played out… you’ll want to pay attention to what’s coming next.

Let’s break it down.

The Fed Has Already Been Cutting… But Yields Are Still High

Since September 2024, the Fed has cut interest rates four times, totaling a full 100 basis points (1%). But even with those cuts, the 10-year Treasury yield — which mortgage rates are closely tied to — shot up from 3.62% in September to a peak of 4.78% in January 2025. Mortgage rates followed, rising from around 6.15% to 7.25% over that same period.

Now we’ve seen them cool off a bit — currently, the 10-year is back around 4.25%, and mortgage rates are in the high 6% range. But the volatility tells the real story: the market doesn’t know where to go next. And there’s good reason for that.

Two Competing Forces Are Driving This Market

On one side, we have signs of a weakening economy. Economic data over the past few weeks — especially jobs numbers and leading indicators — have all trended downward. That typically means lower bond yields and lower rates.

But on the other side… we’ve got tariffs. And tariffs, particularly if they stick, are inflationary. Inflation = bad news for rates.

The Fed’s dual mandate is to keep inflation in check AND support employment. So now they’re in a bind. If they cut too aggressively, inflation could spike. But if they hold too long, unemployment could climb — especially with the government efficiency layoffs starting to hit.

This Is Feeling A Lot Like 2018

Back in 2018, the Fed kept raising rates into a weakening economy, while Trump’s first round of tariffs hit global trade. The result? The S&P 500 dropped 14% in Q4 (20% peak-to-trough), housing activity slowed sharply, and we saw the early signs of what would become the 2019 rate cut pivot.

Fast forward to today — rates are again elevated, the Fed is caught between conflicting data, and we’re seeing another tariff-driven wave of uncertainty. While some believe the tariffs are a negotiating tactic (as they were in 2018–2019), the early impact is already being felt in markets.

So What’s Next?

This is where it gets tricky.

If tariffs ease and the economy holds, we could stabilize — maybe even see mortgage rates slide a bit. But if inflation ticks back up OR economic data worsens (or both), we could be facing the dreaded stagflation scenario.

So what can you do?

Watch the 10-year Treasury yield — it tends to move before the Fed does. And remember, every time rates have dropped into the low 6% range, we’ve seen demand surge. There’s real pent-up demand waiting on the sidelines.

If you’re looking to buy, sell, or refinance, don’t try to time the perfect moment. Just make sure you’re prepared for the opportunities when they come.

And if you’ve got questions — you know where to find me.