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A Dramatic and Unexpected Week for Treasury Yields and Mortgage Rates

Mortgage rates are notoriously difficult to predict, as they’re determined by a complex interaction of various macroeconomic and industry factors. However, the movement of one particular metric, the 10-year U.S. Treasury yield, can generally be relied on as a direct precursor to movement in fixed mortgage rates.

When President Trump unveiled stiffer-than-expected global tariffs on April 2, the stock market plunged. And per conventional market logic, the bond market moved the other way—sending U.S. Treasury prices higher and yields lower (bond prices and yields move in opposite directions).

When the 10-year Treasury yield falls, mortgage rates typically decline as well. And that’s what we saw for the first two days after Trump’s announcement, which occurred on a Wednesday afternoon.

But by the following Monday, Treasury yields abruptly reversed course. And they didn’t stop for five days. By the end of last week, the 10-year Treasury yield had surged an eye-popping 47 basis points. It was the biggest weekly increase since the financial crisis of 2008.

This was terrible news for house hunters waiting to lock in a more affordable mortgage rate. As recently as early March, the 30-year mortgage rate average clocked in at a four-month low of 6.50%. But after rising 44 basis points last week, Friday’s flagship mortgage average had shot up to 7.14%. It was the largest Friday-to-Friday increase in almost three years.

How Experts Explain the Bond Market Surprise

Many financial experts have been scratching their heads about the dramatic turn of events for Treasury yields, as the stock market continued tumbling through last Tuesday (before beginning a slow recovery Wednesday). What caused bond prices to sink at the same time that the stock market was also still declining?

One theory is that investors predict tariff-triggered trade wars will push inflation higher by way of more expensive consumer goods. If inflation rises, that could force the Federal Reserve to keep interest rates high for longer. And that, in turn, makes locking in today’s Treasury rates less appealing—driving their price down.

Another top theory is that Trump’s stricter-than-expected global tariffs could cause foreign governments to retaliate by dumping their U.S. bonds. Or even aside from retaliation, countries may opt to buy fewer new U.S. bonds going forward. In both cases, this could drive U.S. bond prices lower.

In all scenarios right now, the dominant theme is “uncertainty”. With it unclear which countries will retaliate, which will negotiate, and which tariffs President Trump may choose to retract or soften—and, as a result, how inflation and economic growth will be impacted—markets and the Federal Reserve are in a state of limbo awaiting greater market clarity. The Fed next meets on May 6–7, and at this time, interest rate traders have priced in a greater than 80% probability that the central bankers will leave rates where they are.

As for mortgage rates, they have seen a slight bit of relief so far this week, with a mild drop Monday, and Tuesday rates moving lower still. But where they go from here is difficult to predict

How We Track the Best Mortgage Rates

The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.

In the wake of President Donald Trump’s tariff announcements, economists and analysts have grown nervous that lower sentiment could foretell a slowdown in economic activity. 

Some economists expect that recent poor consumer and business sentiment will begin showing up in the economy in the form of slower sales and weaker growth. So far, there’s little indication that those feelings have turned into actions, as there have yet to be noticeable changes in data that would demonstrate a meaningful pullback in the economy.

“Given where we are, it seems like only a matter of time before grim sentiment feeds into the hard data,” Nationwide Financial Market Economist Oren Klachkin wrote after last week’s disappointing consumer sentiment results. “This may not occur right away because of front loading, but softer spending is likely on the horizon.”

Differences Between ‘Soft’ and ‘Hard’ Data

So-called “soft data” are generally survey results of either consumers or business leaders that show how people feel about the economy.

Market watchers track sentiment surveys for consumers, small businesses, and home builders, among others. Closely followed Purchasing Managers Index (PMI) surveys of manufacturing and service sector executives are another example of soft data.

“Hard data” mostly comes from measurements collected during business activity, like prices charged, sales volumes, job listings, and factory production levels. U.S. jobs data, inflation reports, and gross domestic product (GDP) readings are examples of hard data.

“Hard data provides a factual basis for analysis, while soft data offers valuable insight into the sentiment surrounding the economy,” wrote Steve Latham, chief investment officer at Bernicke Wealth Management. “By assessing both types in tandem, we can make more informed decisions.”

Why Economists Look to Soft Data for Clues On Hard Data

Soft data is important because sentiment can result in actions. People who worry about the economy may not go out and spend. For example, since the U.S. economy heavily relies on consumer spending, poor consumer sentiment surveys can make economists nervous.

“A dour consumer outlook is likely to lead to households reining in spending either in anticipation of tougher economic conditions ahead or in response to higher prices on a range of goods,” said Jim Baird, chief investment officer with Plante Moran Financial Advisors.

Weakening sentiment hasn’t shown up yet in most hard data, especially since tariffs may lead some consumers and business owners to increase short-term spending to make purchases before tariffs take effect. Indeed, job growth has remained robust despite the economic jitters, and retail spending is expected to rebound in March after a slow start to the year. 

But with tariffs in place, some economists say it’s only a matter of time before hard data reflects the soft data.

“The bottom line is that the incoming data remains solid, but the soft data is deteriorating,” wrote Apollo Chief Economist Torsten Slok. “With tariffs not going away, the observed weakness in the soft data should be expected to spill over to weakness in the hard data over the coming months.”

Consumers are getting a reprieve from soaring egg prices this Easter, according to new data.

Egg prices ticked down for the first time in nearly a year during the first two weeks of April, the data analytics firm Earnest Analytics said Monday. Across 15 brands, a dozen eggs cost an average of $7.30 from April 1 to 13th, down 1.6% from a record $7.50 in March, Earnest said.

More relief may be on the way, with wholesale prices falling more than 20% from February to March, according to the US Bureau of Labor Statistics.

Consumers have lately cut back on egg purchases amid soaring prices, according to Earnest, which estimates sales in March fell more than 11% year-over-year. Federal authorities have also been monitoring egg prices, with the Department of Justice Department launching an investigation into alleged price gouging and requesting information from Cal-Main Foods (CALM). Cal-Maine, the largest US egg supplier, said earlier this month that it’s cooperating with the probe.

Prices climbed as avian flu killed millions of hens over the past year, restraining supply. Some grocers capped how many eggs customers could buy. Sprouts Farmer’s Market (SFM) didn’t ration purchases or raise prices, and the supermarkets’ customers noticed, CEO Jack Sinclair said last month.

“I think every customer in the United States must have 1,000 eggs in their fridge because they get sold really quickly at the moment,” Sinclair said, according to a transcript from AlphaSense.

Double-digit prices per dozen have been common in recent weeks. Restaurants like Waffle House imposed surcharges for dishes that contain eggs. Some bodegas began using egg substitutes in New York City’s signature bacon-egg-and-cheese sandwich—and selling individual “loosie” eggs to those on a budget, news outlets reported.

The shortage hasn’t spared large restaurant chains with years-long egg contacts, executives said. Some suppliers imposed surcharges; others couldn’t get as many eggs as anticipated, forcing kitchens to spend more on eggs. The latter is likely to cost Cracker Barrel (CBRL) $4 million over the full fiscal year, CFO Craig Pommells said last month. 

“Although our egg prices are fully contracted for the remainder of fiscal 2025, one of our vendors has lost some capacity due to the avian influenza outbreak, and as a result, we’ve had to purchase some eggs on the open market,” Pommells said.

Hewlett Packard Enterprise (HPE) shares surged Tuesday after Bloomberg reported activist investor Elliott Investment Management has built a more than $1.5 billion stake in the server maker.

Elliott will look to engage with HP Enterprise’s leadership on ways to maximize the company’s value, people familiar with the matter told Investopedia. HP Enterprise declined to comment.

In its latest quarterly report last month, HP Enterprise’s revenue topped estimates, while adjusted profits for the first quarter, along with its projections for the second quarter and full fiscal year, came in weaker than expected. The tech firm said it planned to cut costs and lay off about 5% of its workforce over the next 18 months.

Elliott Also Built Stakes in Southwest Airlines, BP, and Phillips

Elliott has recently made an impact with its stake in Southwest Airlines (LUV), getting several of its nominees placed on the company’s board late last year. This year, Elliott has reportedly built stakes in oil and gas companies BP (BP) and Phillips 66 (PSX), and has invested in the tech sector previously with firms including Salesforce (CRM)

HP Enterprise shares were up over 4% in recent trading, but are still down roughly 30% since the start of the year.

Shares of USA Rare Earth (USAR) surged for a second straight session Tuesday following a report that President Donald Trump intends to stockpile critical deep-sea metals to counter China.

Shares of the Stillwater, Okla.-based company soared 41% yesterday after the Financial Times reported over the weekend that the Trump administration was “drafting an executive order to enable the stockpiling of metal found on the Pacific Ocean seabed, in an effort to counter China’s dominance of battery minerals and rare earth supply chains.”

USA Rare Earth, whose stock jumped a further 26% in intraday trading Tuesday, did not immediately respond to an Investopedia request for comment.

Alexander Gray, an Asia expert who served in the first Trump administration, told the FT that “catalyzing U.S. government focus on the areas of greatest vulnerability to (People’s Republic of China) ambitions is essential,” as China views the deep seabed as “a front line in economic and military competition with the U.S.”

Shares of USA Rare Earth had been down about 28% in 2025 until this week’s surge.

Risks are mounting, but the economy is still in a good place, according to Bank of America CEO Brian Moynihan. 

Moynihan on the company’s first-quarter earnings call Tuesday morning said the bank’s research team “does not currently believe we’ll see a recession in 2025,” though it has lowered its growth rate estimates for US gross domestic product. The bank doesn’t expect the Fed to cut rates this year, he said.

Bank of America (BAC) topped first-quarter earnings estimates on Tuesday. Other big banks have also reported better-than-expected results for the quarter when market volatility fueled big gains in trading revenue for many. 

Moynihan joined other big bank executives in expressing some concern about economic uncertainty. He noted that the odds of a recession had increased recently, but added it would be “a very slight recession, and we should fare well on that.” 

Moynihan pointed to healthy consumer spending and business data as reasons for optimism. Consumer spending, he said, continued to grow at a strong clip in the first quarter despite concerns that tariffs will force Americans to rein in their spending. Certain retailers may be seeing slower sales, he said, “but in the aggregate, the consumer keeps pushing money into the economy.” 

BofA’s business clients also ended the quarter on stable footing, according to Moynihan. “As we look at our business side and what our business clients are telling [us], in the current setting they remain profitable, liquid and have strong results,” he said.

Recent moves suggest President Donald Trump may push to privatize the federal student loan system, but experts say he could have a hard time getting lenders and lawmakers on board.

Trump recently signed an Executive Order initiating the closure of the Department of Education. In the order, the administration said the Department of Eductions handles more than $1.6 trillion in student debt, equating it to the size of one of the U.S.’s biggest banks, Wells Fargo. Yet, the department has fewer than 1,500 employees in the Office of Federal Student Aid, compared to more than 200,000 employees at Wells Fargo, the order said.

“The Department of Education is not a bank, and it must return bank functions to an entity equipped to serve America’s students,” Trump said in the executive order.

In addition, a day after Trump signed the order, he said the Small Business Administration (SBA) will take on the management of federal student loans. The SBA guarantees loans for small businesses issued by private banks and other financial institutions.

These moves could signal a push to privatize student loans, Mark Kantrowitz, a student loan expert, told Investopedia in an email. The White House and Department of Education did not respond to a requests for comment; however, there is a precedent for a private federal student loan system.

What Would Privatizing Students Look Like?

Federal student loans were facilitated privately with the Federal Family Education Loan (FFEL) program until 2010.

When the FFEL program still provided new loans, the Department of Education worked with private lenders to offer student loans with federal government guarantees. Some borrowers still hold FFEL loans, but in many cases, these borrowers are ineligible for most federal student loan relief programs.

This would be more widespread if student loans were privatized. Borrowers would likely lose federal forgiveness and discharge programs, in addition to flexible repayment options, Kantrowitz wrote in an article for The College Investor.

Some conservative politicians criticize the student loan program for spending too much on forgiveness programs and not incentivizing borrowers to pay back their debt. According to a report from the Government Accountability Office, federal student loans cost the federal government $197 billion as of fiscal year 2021.

“Since private lenders would take financial losses if they lend to students…they have an incentive to steer students toward institutions and programs whose graduates typically earn enough to repay their debts,” said fellows from think tank American Enterprise Institute in a report. “Privatizing the federal student loan program would save taxpayers hundreds of billions of dollars.”

Will Trump Be Able To Privatize Student Loans?

Student loans could return to a privatized system, but it would need Congressional approval, and private servicers may not be willing to take the large student loan portfolio, experts said.

To privatize existing student loans, the federal government would likely need to sell the existing portfolio to private lenders. However, private loan servicers are unlikely to be able to fund more than a trillion dollars through capital markets and bond issues, Kantrowitz said.

“Even with a steep haircut, discounting the portfolio by 50%, they just don’t have the money,” Kantrowitz said. “If they were to try to sell the portfolio for that, how will Congress be able to fund such a huge write-down?”

The federal government would need to provide guarantees or subsidies to make the loans attractive to private lenders. Yet, even with this, private lenders may not have the administrative capacity to manage all student loans and would likely resort to working with existing loan servicers, Kantrowitz wrote.

Citigroup (C) shares rose in early trading Tuesday after the bank reported better-than-expected first-quarter results as volatile markets boosted equities trading.

The firm reported earnings per share (EPS) of $1.96 on revenue of $21.60 billion, while analysts surveyed by Visible Alpha expected $1.84 and $21.19 billion, respectively. Markets revenue rose 12% year-over-year to $6.0 billion, powered by a 23% jump in equities trading revenue to $1.5 billion.

Citigroup shares advanced 2.4% soon after the opening bell Tuesday. They entered Tuesday down 10% in 2025.

Since bank earnings began last Friday, Morgan Stanley (MS), JPMorgan Chase (JPM), Wells Fargo (WFC), and Goldman Sachs (GS) all posted results that beat analysts’ estimates, but executives have struck a cautious tone about the rest of the year due to uncertainty caused by tariffs.

Citigroup CEO Jane Fraser said she was bullish about the prospects for the U.S. dollar, which is on track to have its worst two-month stretch since 2002.

“When all is said and done, and longstanding trade imbalances and other structural shifts are behind us, the U.S. will still be the world’s leading economy, and the dollar will remain the reserve currency,” Fraser said.

UPDATE—April 15, 2025: This article has been updated to include refreshed share prices.

Shares of Allegro MicroSystems (ALGM) tumbled 8% in premarket trading Tuesday after chipmaker ON Semiconductor (ON) announced that it has pulled its offer to acquire the circuit manufacturer.

ON Semiconductor, or Onsemi, last month upped its offer to $35.10 per share, valuing Allegro at roughly $6.9 billion. Allegro rejected the offer, calling it “inadequate.”

Onsemi said Tuesday that it has withdrawn its offer after determining that there is “no actionable path forward.”

“While we continue to believe that a combination with onsemi would be beneficial to all stakeholders of both companies, after careful consideration, we have decided to withdraw our acquisition proposal given the reluctance of Allegro’s Board of Directors to fully engage and explore our proposal,” Onsemi CEO Hassane El-Khoury said.

In February, Onsemi’s fourth-quarter results fell short of estimates as El-Khoury said the firm continues “to navigate this market downturn,” calling 2025 an “uncertain” year. Shares of Onsemi were down less than 1% about 30 minutes before the opening bell.