It's good to be back after a long July 4 holiday break. This week, let's recap some of the recent headlines and economic data we've seen and what it means for the marketplace.

In summary, US treasury bond yields so far this month have remained at the lower end of their 30-day trading range, as investors remain unsure about geopolitical events around the world (hello again, Brexit), even as U.S. economic data on jobs and inflation remains strong. This, of course, has kept mortgage rates from rising as they tend to follow the momentum of the 10-year US Treasury note.

Headline headwinds

The top economic story this week has been the Trump Administration's first tariffs on China taking effect. The U.S. imposed tariffs on $34 billion in Chinese goods, kicking off a tit-for-tat with the communist nation. Beijing responded immediately with equal tariffs on $34 billion in American goods.

The latest is a proposed list of $200 billion in additional Chinese imports that may face tariffs from the Trump team. CNBC has published a list of the goods most likely to be affected if you'd like to dig more into this topic. The important thing to remember is that consumer pain from the tariffs so far will be delayed in most cases. Many items are pieces and components of larger goods, so it will take time to see the price impacts.

Ultimately, most analysts believe this trade war is a standoff to see who blinks first. Since the trade balance tips in China's favor right now, the U.S. has a stronger hand as the war escalates. But it could create headaches for U.S. exporters – and higher prices for U.S. consumers in the meantime. Read more about trade in my recent blog on this topic.  

The other geopolitical headwind to watch is the Brexit developments in Great Britain. This week, the UK's prime minister, Theresa May, lost two key cabinet members over disagreements on how to proceed with Brexit, which is the British planned exit from the European Union. Massive economic policies, from currency to regulation, hand in the balance as May navigates an increasingly difficult position.

Then, President Trump arrived in London this week for a state visit. While Brexit is still on track to happen in early 2019, keep an eye on these developments. If May cannot steer a path through all the controversies, she risks losing her position and opening up the UK to even more political uncertainty.

Data looks strong

The headline data points this week were two key inflation numbers and a payroll report.

The consumer price index, an indicator of consumer price inflation, hit its highest level in six years, with consumer prices going up 2.9 percent over the last 12 months. This is its highest number since 2012.

The producer price index, a measure on wholesale inflation, beat analyst estimates with its own six-year high this week. The Labor Department said on Wednesday its producer price index climbed 0.3 percent last month, lifted by increases in gasoline prices. The PPI rose 0.5 percent in May. In the 12 months through June, the PPI advanced 3.4 percent, the largest gain since November 2011.

Both the CPI and PPI indicate inflation is likely to hit or exceed the Federal Reserve's target rat of 2 percent.

Meanwhile, payroll data continues to show strength in the job market. The U.S. economy created 213,000 new jobs in June, according to a government report. This beat analyst expectations. The unemployment rate actually rose to 4 percent as the good news drew more workers back into the work force, seen in a higher workforce participation rate. Average hourly earnings rose 0.2 percent in June and is now up 2.7 percent year-over-year, showing wage growth is finally kicking in.

The tightening labor market and rising raw material costs are expected to push up inflation through next year. Manufacturers are facing rising input costs, in part because of tariffs on lumber, aluminum and steel imports. So far, they have not passed on those higher costs to consumers. But it will eventually trickle down to consumer prices.

Fed officials have indicated they would not be too concerned with inflation overshooting its target this year. The Fed raised interest rates in June for a second time this year and has forecast two more rate hikes before the end of 2018.

While those rate hikes certainly affect borrowing costs, the key for mortgage professionals remains the 10 Year US Treasury yield. We've seen this number rise above 3 percent this spring, before retreating in the first half of the summer due to geopolitical uncertainty.

That trend remains in place. U.S. economic fundamentals are strong. But Treasury yields face some headwinds due to investor uncertainty worldwide. The 10Y yield fell early Friday to about 2.84 percent. Keep an eye on how it responds to market data and world events. Mortgage rates will likely follow suit.