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What Powell Said — and Why It Mattered
Speaking at the Economic Club of Chicago, Fed Chair Jerome Powell said the central bank is in a good position to “wait for greater clarity” before making any interest rate decisions. In other words: no rush to hike, maybe even room to cut if the economy slows. (Source: Reuters)
How the Markets Reacted
Investors took Powell’s remarks as a signal that rate hikes are off the table for now—and rate cuts could be on the horizon if growth falters. The result? A quick drop in Treasury yields:
| Metric | Before Speech | 30 Min After | Change |
| 2-Year Treasury | 4.46% | 4.34% | -12 bps |
| 10-Year Treasury | 4.32% | 4.29% | -4 bps |
| Fed Funds Futures | 45% chance of Sept cut | 60% | +15 points |
(Data via Reuters)
Why Bond Yields Affect Mortgage Rates?
Mortgage rates—especially the popular 30-year fixed—tend to follow the 10-year Treasury, plus a risk premium. When the 10-year yield drops, lenders’ costs go down, giving them the option to lower mortgage rates.
Today’s national 30-year fixed average is 6.86%, dipping below the 7% mark for the second day in a row (per Mortgage News Daily). A 4-basis-point dip in the 10-year might not seem huge, but if this trend holds, it could trim another 5–15 bps from mortgage rates in the coming days. Typically, one-third to one-half of a Treasury move shows up in mortgage pricing within a week.
What Could Push Rates Lower—or Stop the Drop
Potential tailwinds for lower rates:
- More signs of slowing economic growth or easing inflation
- Continued trade uncertainty prompting investors to seek safety in bonds
- Fed officials staying cautious during the current “blackout” period before the next policy meeting
Potential spoilers:
- A surprise spike in inflation (like hot CPI/PCE data)
- Hawkish Fed commentary or a strong jobs report
- Renewed tariff drama that stirs inflation fears
What It Means for Buyers and Refinancers
Powell essentially said, “We’re on pause until things get clearer.” That message nudged bond yields—and mortgage rates—slightly lower. If this calm vibe in the bond market continues, there’s room for mortgage lenders to offer even lower rates.
Pro tip for mortgage shoppers:
- Lock now if you’re closing within 15 days and see a sub-7% offer that works for you.
- Float (with caution) if you have more time and can handle daily swings—another small drop in rates is possible if next week’s data disappoints.
Bottom line: Keep an eye on the bond market. It’s calling the shots on whether this is just a short-lived dip—or the start of a spring cooldown for mortgage costs.
