How the Trump/Musk -Safeing can influence the mortgage interest rate
Musk has a limited influence of congress
If we take into account the possibility that Musk could prevent the tax assessment from being granted, it can lead to a reduction in the treasury delivery to the bond market and possibly improve the rates. However, it is unclear how much influence Musk has on members of the congress. Although Musk is undoubtedly a prominent figure, Trump is still the dominant influence on the Republican party, including republicans in the congress. It seems unlikely that the interests of Musk would have priority over those of Trump, so this possibility seems remote.
Musk will put the trade war in the spotlight
Musk stated today that rates could be possible lead to a recession. If the trade war gets worse in the future, the White House is likely to prevent social media disputes with the owner of X. However, if the trade war takes a turn and the negotiations stall, Musk could influence the situation in ways that can be challenges for the Trump administration to get what it wants. Less trade disruption can contribute to a more stable environment for mortgage spreads, which may lead to a lower mortgage interest rate.
Musk can pour money in the midterms
If Musk and Trump do not reach a resolution, there is still a potential scenario that we have to consider. With the interim elections that are approaching, when trading tensions escalate, this can offer Musk the opportunity to support candidates of both the democratic and the Republican parties that oppose rates. Obtaining enough seats in the midterms can enable them to limit the president’s assets to further impose the rates. This development can have important implications for the Federal Reserve: Some FED presidents have suggested that if trade agreements are reached, the Fed returns to a more Dovish attitude and potential interest rates can be on the table. This can be a way in which Musk can influence mortgage interest in the future.
Conclusion
Although these speculative theories can be – and I usually do not enjoy discussing political economic matters – they are part of our current reality. For the time being it is more productive to concentrate on the upcoming Jobs Friday report and what insights the labor market can offer – which has a greater significance for the mortgage interest than the current feud.
