Let’s be real—all the tools we once used to measure the economy and mortgage rates are useless now. 🛠️🚫. Economists predicted mortgage rates would hit 6.62% in Q1 ending March 31; it was close. March closed out rates at 6.74%. Mortgage Rates spiked in April, reaching a high of 7.09%.  📈 Fortunately, mortgage rates closed out the month lower. 📉  May, however, could be a repeat of April. The economists revised their projections for Q2 from 6.45% to 6.63%, an increase of .18%. 

❓ Why are The Feds and Wall Street on Edge? 

👉 First, understand how tariffs can affect the 10-year Treasury bond and Mortgage-backed Securities by checking out “Why Mortgage Rates and the Bond Market Are at Risk: Trade War Fallout“ for important details. 

💠Secondly, domestic confidence is shaky, sinking to its lowest level since May 2020. Personal income is down, and spending was up, go figure. Regarding inflation, March’s and April’s numbers were excellent news.  🎉 But it no longer matters because the Fed 🏦 now needs to measure the economy with a new stick. 📏Buckle up, it could be a bumpy ride. 🎢

🔥 Why Today’s spike doesn’t add up on the surface: 

• 📈 Yields Are Rising Not From Growth — But From Fear:  A healthy economy doesn’t produce rising yields like this with no growth. This is fear-driven… and it’s global. 🌏
• 📊 Debt Has Reached a Breaking Point: The U.S. needs to sell trillions in bonds to keep the lights on. The Fed can’t save us without triggering inflation if fewer buyers show up.
• % The Mortgage Market Is the Collateral Damage: When bond prices fall, yields rise. And when yields rise, mortgage rates spike. It’s that simple — and that dangerous.

👀 Here’s what is likely happening:

1. Bond Vigilante Behavior (Investor Protest)

Foreign and institutional investors may be reacting to the U.S.-U.K. tariff retaliation agreement, especially in light of broader geopolitical trade tensions (e.g., with China). This type of “sell to send a message” behavior is common when investors want to pressure governments to act more fiscally or diplomatically responsibly. You’re right to call it a form of economic extortion—it’s not about data but political leverage.

2. Portfolio Deleveraging and Margin Calls

If equities are jittery (or if we see flight to cash), big funds may sell liquid assets (like Treasuries) to cover losses or shift into cash equivalents. That can happen without a single headline making news—it’s systemic, not emotional.

📌 What’s Important Now: This move isn’t driven by fundamentals—it’s tactical and political. When yields spike without cause, it often sends a message.

💥 The Treasury’s Dirty Secret Is Out. 

For decades, the U.S. Treasury quietly relied on foreign nations to bankroll our debt, with China and Japan footing the bill. But that cozy setup is falling apart thanks to escalating trade wars and ballooning deficits. Whether you love or hate President Trump, his aggressive tactics pulled back the curtain and exposed just how fragile our financial system is. The result? A bond market on edge, fewer willing buyers, and a government scrambling to stay afloat. ⚠️💣

💠Furthermore, as the Fed pulls back and global buyers disappear, the question becomes: Who will buy all our debt? (bonds) GDP contracted, and now tariffs are part of our economy; I’m afraid to see what May’s report will reveal. This is scary stuff! Maybe the government needs to rethink how it buys and sells government bonds. 🤔