"Rates on Hold?" What’s Driving the Latest Market Shifts? Let's talk: Briana Harper Real Estate

Market Update: Interest Rates, Tariffs, and Global Uncertainty

My name is Briana Harper, and I work for Surterre Properties in Newport Beach California. I have lived in Newport Mesa a very long time and now enjoy raising my kids in the same community. We love shopping at the iconic South Coast Plaza, dining at Fashion Island, and indulging in frozen bananas on Balboa Island. As a lifelong resident and real estate professional, I keep a close eye on market trends to help my clients navigate the ever-changing landscape. Here is my take:

Are Rates Coming Down Soon?

This past week, interest rates increased slightly after hitting their lowest levels in months. While the shift wasn't dramatic, it's important to break down why it happened and what might be on the horizon. From tariff rumors to government spending plans, global markets are reacting—and interest rates are along for the ride. Morgage Rates: As of March 6, 2025, the 30-year fixed mortgage rate averaged 6.63%, down slightly from 6.76% the previous week.

Tariff Troubles

Uncertainty surrounding tariffs continues to shake markets. Stocks and bonds have been bouncing around as headlines shift. One day, tariffs seem locked in; the next, they’re paused, scaled back, or altered. This ambiguity keeps traders on edge.

Why does this matter for interest rates? Tariffs influence inflation. Higher costs for goods can drive up prices, which in turn affects the Federal Reserve's decisions on rates. The sooner we get a clear tariff picture, the less volatility we may see in the markets.

"Whatever It Takes"

Over in Europe, Germany shocked the bond market when an official declared the country should spend "whatever it takes" on defense and infrastructure. Germany is known for fiscal restraint, so this shift rattled investors.

When governments ramp up spending, they typically borrow more by issuing bonds. A surge in bonds can lead to falling prices and rising yields—which push interest rates higher. The German 10-year bond yield spiked from 2.40% to 2.80% in just 24 hours, the biggest one-day jump in 40 years. This shockwave spread globally, influencing U.S. Treasury yields and mortgage rates.

American Flag Picture: President Donald Trump has announced that the United States will implement reciprocal tariffs, matching the duties imposed by other countries on U.S. imports. This measure aims to promote fair trade practices and address existing trade imbalances.

Labor Market Worries

Closer to home, the labor market delivered a surprise. The ADP employment report showed only 77,000 private-sector jobs added last month—far below the 150,000 expected. Businesses seem to be in "wait and see" mode, holding off on hiring while navigating economic uncertainties.

The silver lining? Unemployment remains low at 4%. However, if job growth continues to slow, the Federal Reserve may consider rate cuts to stimulate the economy.

Fed Rate Predictions

Market expectations for Federal Reserve moves have shifted. Just a week ago, forecasts anticipated two rate cuts in 2025, but now, futures markets suggest three, with the first likely in June.

However, these predictions remain fluid. If inflation data or employment figures shift unexpectedly, the Fed could adjust its course. The central bank remains caught between fighting inflation and supporting economic growth.

The Big Picture

Zooming out, the trend has been clear: interest rates have declined over the past six weeks as markets priced in slower growth and potential Fed cuts. However, recent global developments—Germany’s spending plans, tariff uncertainties, and labor market wobbles—have put the brakes on further declines. Rates aren’t soaring, but they’re holding steady rather than falling further.

What’s Next?

Key economic reports that could influence rates:

• Consumer Price Index (CPI): A major inflation gauge. Core CPI (excluding food and energy) is expected to dip to 3% year-over-year. A softer number could fuel rate-cut speculation.

• JOLTS Report: This tracks job openings, hires, and quits—offering insight into the labor market’s health and potential Fed actions.

• Tariffs & Germany: No set date, but any major policy announcements could shake markets.

Stay tuned, and we'll break it all down again next time!

Briana Harper

Hammond Moreno Associates

SURTERRE PROPERTIES