“I would say that if the news continues to show that the employment sector remains weak, and that if we see that tariff pressures are eased, like what’s going on with China, I think the mortgage rates will settle back down,” Cohn told Mortgage Professional America. “The markets always tend to be very reactionary. And I think without any concrete data to support a move one way or the other, that the moves can be exaggerated.”
She said the reaction was seen in the 10-year Treasury, which is often most closely associated with mortgage rates. For the second straight Fed meeting, the 10-year jumped after the rate cut announcement. She believes there was no reason for that and that it was an overreaction of the market.
“It’s sort of like trading in the stock market the day after a holiday or a half day, where it’s all the junior traders that are in there, and market moves can be exaggerated because of lighter volume,” Cohn said. “Hopefully, the government will find a way to reopen at some point in the near future. Other than the remarks and disappointing the markets, there was no data that supported bond yields surging 10 basis points.
“It is all on Powell’s comments, and then another Fed member could come out and speak next week and say something very different, and the markets could turn around again. That’s all the markets have to trade on right now.”
Powell’s hawkish comments
Cohn said the rate cut announced Wednesday was expected, but a larger cut really wasn’t in play due to the lack of data the central bank had at its disposal.