Mortgage Rates Today, Apr. 9, 2025: Brace for Fed Minutes This Afternoon

The bigger picture

We've mentioned before the clear but imperfect relationship between stock indices and mortgage rates. When investors are spooked, they tend to flee from exciting and profitable stocks to the haven of boring but safe bonds. And mortgage rates are largely determined by the yields on a type of bond, the mortgage-backed security (MBS).

It's a pretty straightforward mechanism: Investors sell their stock, sending those prices down. They then buy bonds, sending their prices higher. But it's a mathematical inevitability that higher bond prices lead to lower bond yields. So, mortgage rates often fall at the same time that stocks do.

But what's happening in bond markets is more directly relevant to mortgage rates. Yesterday evening, Mortgage News Daily said, "While no one can be sure exactly how things will pan out in the long run, the market is currently expressing extreme disapproval of the new tariff plans. While interest rates had previously benefited from some of the chaos in the stock market, that ship has sailed. Now, both
sides of the market are losing ground (stocks lower, rates higher)."

Earlier yesterday, Dr. Torsten Sløk, chief economist at asset manager Apollo, wrote about the "basis trade," raising a scary prospect for government (aka Treasury) bonds. Mortgage rates typically shadow the 10-year Treasury note, often called the "benchmark" government bond. So, this is likely to infect MBSs, too.

Sløk noted that many hedge funds wager on Treasury futures using heavily leveraged (borrowed) funds. And there's a chance that a significant economic shock could mess with the value relationship between these bonds and their futures.

That could lead to some hedge funds being unable to cover their losses, leaving lenders with enormous, irrecoverable debts. This has echoes of the 2007-08 economic and financial meltdown.

We've tried to make Sløk's warning comprehensible to non-expert readers, but if you'd like to see the full paper, you can read it on Apollo's website.

MarketWatch says the basis trade is already affecting bond markets: "Chaos in the U.S. stock market spread to the $28.6 trillion Treasury market on Monday, and one prominent Wall Street economist [Sløk] said hedge funds bailing out of a popular strategy might have been to blame."

Today's Federal Reserve minutes

The Federal Reserve's rate-setting body is called the Federal Open Market Committee (FOMC). It meets eight times a year to discuss monetary (rates) policy and decides when many general interest rates move up or down. It last met on Mar. 18-19.

This afternoon, at 2 p.m. (ET), the Fed will publish the minutes of that last meeting. And Wall Street will be very interested in those, to the extent that they could easily affect mortgage rates.

Investors' interest will center on what was said at the meeting about how tariffs might affect future changes to interest rates. True, they had no idea back then how high the tariffs unveiled last Wednesday would be. But they could have discussed in principle how they might respond to different levels of tariffs.

If the minutes give the impression that there will be no cuts in 2025, that could exert upward pressure on mortgage rates. Only a fairly firm commitment to the two previously planned cuts might drag those rates lower, we believe.

Coming up

Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates — as we've seen frequently recently, especially over tariffs.

Here's Comerica Bank's commentary on the week ahead:

"While playing second fiddle to the tariff headlines roiling the stock market, the March FOMC meeting minutes and key inflation readings are the main economic releases this week. Following last week’s announcement of reciprocal tariffs, the minutes are likely dated but might provide clues as to how monetary policymakers will react to a slowing economy with rising inflation. Egg prices were a key driver of inflation in recent months, but fell in March, helping cool inflation at the producer and consumer levels. The University of Michigan’s Survey of Consumer Sentiment will probably show another steep drop in confidence and rise in inflation expectations in the April preliminary release. Small Business Optimism also likely took a leg down.

Mortgage rates today

Today's FOMC minutes are likely to be today's big economic news, assuming there are no more tariff scares.

The MarketWatch economic calendar has only one economic report today. And it's yet another one that rarely affects mortgage rates.

It is the February wholesale inventories numbers (yawn, unless you're a wholesaler). Markets expect it to fall to 0.3% from 0.8% in January.

Later this week

Tomorrow brings the consumer price index (CPI) for March. This sometimes rivals the jobs report as an influencer of mortgage rates. So, stand by for that.