Trump's market jawboning cuts oil $40, leaves mortgage rates at 6.48%

President Trump's public pressure campaign has repeatedly moved oil and bond markets in his direction, reshaping prices through words alone.

President Trump's public pressure on oil markets and the Federal Reserve has repeatedly moved prices in his direction, cutting Brent crude more than $40 a barrel while keeping mortgage rates at 6.48%.

"The central bank actually has little control over the cost of home loans — and Americans may be stuck with high rates for a long time," Michael J. Highfield, a finance professor and provost at Mississippi College, said.

Brent crude traded below $100 a barrel as of early June, retreating from a record above $140 after the US launched strikes on Iran in late February. The 30-year mortgage rate averaged 6.48% on June 4, according to Freddie Mac, up from 6% in February. US crude and fuel exports in May were more than 2 million barrels a day higher than the 2024 average, while China slashed inbound shipments by almost 40% from last year's average, according to Vortexa Ltd.

The pattern introduces persistent uncertainty across asset classes. Traders are increasingly pricing in a "Trump risk premium" — the expectation that presidential statements will move prices regardless of underlying fundamentals. With global oil inventories drawing down at a record pace and mortgage rates showing no sign of easing, the question is whether jawboning can substitute for policy.

Oil Markets Test the Limits of Jawboning

Trump has repeatedly claimed a peace deal with Iran is "within reach," a message that has helped cap oil prices even as the US military campaign continues. Open interest in Brent crude futures is at the lowest since August, with elevated volatility forcing traders to reduce risk exposure. "Each week that goes by, the system is tightening by 70 to 80 million barrels. You can't do that forever," Greg Sharenow, who helps manage nearly $24 billion as head of Pacific Investment Management Co.'s commodity portfolio investment team, said.

The administration has deployed emergency measures to stabilize markets, including a pledge to release 172 million barrels from the Strategic Petroleum Reserve. Nearly half of those barrels have sailed to Europe and other overseas destinations. But overall US oil inventories have shrunk to the lowest level in more than two decades, and emergency reserves have little oil to spare as peak summer demand approaches.

Mortgage Rates Resist White House Pressure

Trump has waged an aggressive campaign to pressure the Federal Reserve, and new Fed chief Kevin Warsh — a Trump nominee — has been touting rate cuts since taking office, a reversal from his earlier anti-inflation stance. Yet mortgage rates have risen, not fallen, because they track the 10-year Treasury yield more closely than the fed funds rate. The Congressional Budget Office projects that Trump's 2025 tax and immigration bill will add $3.4 trillion to federal deficits through 2034, requiring the Treasury to issue large amounts of debt that push yields higher.

The spread between 10-year Treasuries and mortgage rates remains elevated compared to historical norms, according to the Urban Institute's Housing Finance Policy Center, as investors demand compensation for refinance risk. Throughout the 1990s and early 2000s, mortgage rates frequently ranged between 6% and 8%, making today's levels less unusual than many Americans think.

The risk for Trump is that jawboning loses its effectiveness. If markets begin to discount presidential statements as noise rather than signals, the president loses a key tool for managing economic expectations. For now, investors remain cautious — pricing in the words while watching the data.

This article is for informational purposes only and does not constitute investment advice.