ASX set to fall, Wall Street mixed; Tesla rival files for bankruptcy

High mortgage rates are making it difficult for some potential homebuyers to afford a house, even though the Federal Reserve began cutting its main interest rate in September in order to make things easier for the economy.

Mortgage rates have followed the trend of longer-term Treasury yields, which have remained relatively high in part because the US economy has remained remarkably solid and because inflation hasn’t eased as much as hoped. Tariffs threatened by President Donald Trump, along with other policies that could put upward pressure on inflation, have also caused some sharp swings for yields in the bond market.

The yield on the 10-year Treasury eased a bit Wednesday and edged down to 4.53 per cent from 4.55 per cent late Tuesday. It was below 3.70 per cent as recently as September and approaching 4.80 per cent within the past few weeks.

Both the bond and the stock markets have increasingly been taking Trump’s tariffs in stride, after earlier showing much more trepidation. The hope on Wall Street is that Trump is using such threats merely as a tool to drive negotiations, and the ultimate effects won’t be as bad as they initially appeared.

All told, the S&P 500 added 14.57 points to finish at 6,144.15. The Dow Jones Industrial Average rose 71.25 to 44,627.59, and the Nasdaq composite gained 14.99 to 20,056.25.

Such calm responses, though, could of course make things worse if conditions don’t go as Wall Street expects, or if it emboldens Trump to make even more forceful actions.

For its part, the Federal Reserve has already signalled it may make fewer cuts this year than earlier expected, in part because of worries that inflation will remain stubbornly above its 2 per cent target. Cutting rates can boost the economy and juice prices for investments, but they can also give inflation more fuel.

Minutes released Wednesday for the Fed’s last policy meeting in January showed officials discussed how Trump’s proposed tariffs and mass deportations of migrants, as well as strong consumer spending, could push inflation higher this year

In stock markets abroad, London’s FTSE 100 fell 0.6 per cent after a report showed U.K. inflation accelerated to a 10-month high. That could put pressure on the Bank of England, which had been cutting interest rates to invigorate its tepid economy.

Indexes fell more than 1 per cent in other European markets, including in France and Germany, after finishing mixed across Asia. South Korea’s Kospi jumped 1.7 per cent, while Japan’s Nikkei 225 slipped 0.3 per cent.

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