On Tuesday, Fed's Chairman Jerome Powell again raised the alarm about the economic fallout from the pandemic. In his new comments, he expressed his concern about the possibility of a second round of quarantine. Worried comments from Fed's Powell foreshadow even lower mortgage rates.
The US House of Representatives is discussing another batch of payments of $ 1,200 to American citizens, which will be paid by checks, direct deposits, and debit cards. However, the Senate has not yet considered this idea of the so-called additional stimulus.
Due to ongoing concerns about the economy, investors are turning safe-haven assets such as treasury bonds. Prices of government bonds are rising, bond interest rates are falling, and mortgage rates are dropping.
When interest rates are negative, banks pay interest to borrowers and charge depositors fees for keeping their money.
Powell underlined that the Fed would continue to rely on other measures. The regulator will increase the movement on mortgages by lowering rates to help the weakening economy rise.
The central bank bought up mortgage-backed securities — individual mortgages combined into investments like bonds — and this campaign helped lower mortgage rates.
According to Daniel Hale, chief economist at Realtor.com, mortgage rates will be lowered further. "We expect mortgage rates to stay low and possibly slip lower. We'll flirt with the 3% threshold for a while before we go below it," she said.
Apart from that US President Donald Trump exacerbates the global fight for taxation.
On Tuesday, the Trump administration said it would open an investigation on digital commerce taxes that were adopted or proposed in nine countries and the European Union, exacerbating the global battle.
The actions of the administration may ultimately lead to the introduction of US tariffs on imports from Brazil, the UK, India, and several other countries, which may cause yet another global trade dispute that will lead to retaliatory taxes on US goods.
An investigation by a sales representative of the United States can also complicate the global negotiations that have been going on for more than a year and have been aimed to reach a multinational common consensus on how to tax online trade from overseas.