Mortgage rates increased by about 10 basis points during the first half of this week, erasing the past month of steady declines. They remain below recent highs touched in early May, but are still up nearly 100 basis points since the start of 2018. 

Comments from several Federal Reserve officials – coming on the heels of remarks from the president lamenting the recent increase in interest rates – suggest that the central bank remains on a path of gradual rate increases. The escalating trade tensions between the United States and China prompted further fear in markets, and the prospect of new subsidies for farmers hurt by recent trade policy decisions raised the outlook for U.S. fiscal deficits and demand for long-term debt.

Abroad, news out of the Bank of Japan suggests that monetary policy could tighten marginally in East Asia’s second largest economy.

Over the coming week, markets will watch for the first read of second quarter GDP data, due Friday. The Federal Open Market Committee will meet next Tuesday and Wednesday, although no policy changes are currently expected.