The main influence on mortgage rates this week was fresh news about tariffs, which was negative for mortgage rates. The major economic data came in mostly on target, and Thursday's European Central Bank meeting contained no policy changes and had just a minor impact. As a result, mortgage rates ended a little higher. 

On Thursday, the Trump administration announced that the U.S. and the European Union (EU) had agreed not to escalate their trade dispute. Neither will impose further tariffs while the two sides attempt to work out their differences. If the U.S. and the EU can come to terms, it would allow them to work together to focus on improved trade agreements with other countries, most notably China. Investors reacted to the reduced chances of a trade war by shifting to riskier assets such as stocks from safer assets such as bonds, including mortgage-backed securities (MBS). The decrease in demand for MBS caused mortgage rates to rise a little. 

Looking ahead, the important monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the Core PCE price index, the inflation indicator favored by the Fed, will be released on Tuesday. The ISM national manufacturing index will come out on Wednesday, and the ISM national services index will come out on Friday. The next Fed meeting will take place on Wednesday. No change in policy is expected. 

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