Macro

President Trump announced a 10% baseline tariff on all U.S. imports and higher 'reciprocal' tariffs on countries including China (34%), the EU (20%), and Japan (24%), escalating global trade tensions. The move, set to take effect in early April, risks triggering retaliatory measures and a trade war, with economists warning of higher consumer prices, reduced manufacturing competitiveness, and potential market instability.

The consumer sector is under pressure this month, primarily due to the reinstatement of a 10% base tariff on major trading partners, increasing import costs and dampening near-term spending sentiment. Although a temporary 90-day tariff reduction offers some relief, the sharp escalation of duties on China to 125% overshadows this reprieve, reinforcing inflationary risks and supply chain uncertainty for consumer goods. These trade actions collectively weigh on sector sentiment, contributing to a bearish read.

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Mortgage rates remain elevated, pressuring the 2026 housing market as year-over-year purchase volume drops 3.4%, per Keefe, Bruyette & Woods. As of August 20, the average 30-year fixed-rate mortgage stands at 6.65%, slightly below last week but above 6.58% a year ago. The 10-year Treasury yield, which mortgage rates track, closed at 4.65% on August 19, up from 4.33% last year. KBW managing director Bose George expects continued weakness in mortgage applications due to rising rates and seasonal slowdown. Fannie Mae forecasts rates near 6.8% through 2027. The Federal Reserve, now chaired by Kevin Warsh, has held rates steady in 2026 after three cuts in 2025, with no hike expected until December. The median single-family home price reached $410,700 by Q2 2026, up from $208,400 in Q1 2009, as supply constraints keep prices high.

Tariff escalation and rate uncertainty; market turmoil

As of August 13, 2026, the average 30-year fixed mortgage rate has eased slightly to 6.67%, down two basis points from the prior week but still near a one-year high, with the 15-year fixed rate at 5.96%. The 10-year Treasury yield, which mortgage rates closely track, closed at 4.68% on August 12, and the spread between the two remains near two percentage points at 1.99 points. The Federal Reserve, now chaired by Kevin Warsh, has held rates steady in 2026 after three cuts in 2025, and traders do not expect a quarter-point hike until December at the earliest. Fannie Mae continues to forecast rates in the 6.2% to 6.3% range through 2027. The National Association of Realtors reports year-to-date home sales are up 2.4% despite the elevated rate environment, though affordability remains strained by high borrowing costs and a median single-family home price of $410,700 as of Q2 2026. Experts advise buyers not to wait for rates to drop, noting that a recession could actually increase demand for limited supply if rates fall. Strategies for buyers include considering fixer-uppers, condos, 15-year mortgages, rate buydowns, and exploring less-expensive neighborhoods or longer commutes.

'Liberation Day' tariff shock crashes markets

Trump tariff escalation, market selloff, ad and hardware-cost fears

'Liberation Day' tariff shock — supply-chain and retaliation fears

Crude slid toward the $60s as Trump's tariffs stoked recession fears just as eight OPEC+ producers surprised markets by nearly tripling their planned May output hike to 411,000 barrels per day. Goldman Sachs cut its December 2025 Brent and WTI forecasts to $66 and $62 and JPMorgan raised global recession odds to 60%, squeezing energy earnings from both the demand and supply side.

Energy sector sentiment is neutral despite OPEC+ accelerating oil production amid falling prices and tariff-driven market pressure. The decision to boost output is weighing on prices, yet broader market stability and demand resilience are tempering deeper losses. The sector remains underpinned by structural supply dynamics rather than short-term trade fluctuations.

Trump tariff escalation volatility, offset by energy-dominance policy

European rearmament (the EU 'ReArm Europe' plan), the June NATO 5% spending target, and the June Israel-Iran war with US strikes on Iran's nuclear sites drove euphoric demand; China's rare-earth export curbs added an input-supply risk but demand overwhelmed it.

China imposes sweeping rare-earth export controls; Western producers gain leverage