Dollar Drop Drama
What’s really impacting mortgage rates now
Happy Friday — Brian Manning here with your latest economic and mortgage market update. This week, we’re diving into U.S. dollar movement, retail sales numbers, Federal Reserve positioning, and what’s really driving interest rate volatility. Let’s break it down.
U.S. Dollar in the Headlines
There’s been a lot of noise around the weakening U.S. dollar, especially after Treasury Secretary Janet Yellen commented that global investors are pulling back from U.S. assets.
Yes, the dollar is currently at a three-year low, but that doesn’t tell the full story.
When we zoom out and compare the current value to historical averages—going back to 2015—we’re still well within a healthy range. This isn’t an all-time low, and we’ve seen these levels before in recent years.
The key takeaway? Don’t get swept up in the panic. Always look at the long-term trend.
Retail Sales: Real Growth or Pre-Tariff Panic?
Retail sales were up 1.4% in March—slightly better than expected. But the core figure, which excludes large-ticket items, came in lower than forecasted.
It raises a question: Are consumers buying more in anticipation of tariff-driven price increases?
We may be seeing a short-term bump that fades in the coming months. April and May numbers will offer a clearer picture of consumer behavior and overall economic momentum.
Fed Chair Powell: Inflation First, Employment Second
Jerome Powell spoke this week and signaled something very clear: The Fed isn’t rushing into rate cuts.
Although the Fed is supposed to balance price stability and employment, Powell appears focused squarely on inflation for now—even as unemployment pressures mount.
That means borrowers, investors, and homebuyers may need to temper expectations for near-term rate relief.
Mortgage Rates and the Bond Market
A volatile stock market triggered margin calls last week, forcing leveraged investors to sell off assets—bonds included.
This sell-off pressured mortgage rates higher, even though it had nothing to do with core economic fundamentals.
We’ve also fielded questions about China potentially dumping U.S. bonds. From everything we see, that’s not happening. China has every incentive to not strengthen its currency, which would be the result of large-scale bond selling.
Bottom line: Most of the rate pressure is coming from technical events, not geopolitical action.
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