Markets Hate Uncertainty

This week gave us more than two insane headlines but there were two specifically that actually collided in the bond market. Just hours after I published this vlog last week, talking about the impacts of Trump’s announcement that he wants $200 billion in mortgage-backed securities purchased by government entities in order to bring down mortgage rates…the Federal Reserve was served a flurry of subpoenas. This man is his own worst enemy because the bond market didn’t like that news of an investigation one bit. 

Nevertheless, we saw a SURGE of buyer activity over the weekend and into this week. Which, when you consider what is going on in the world right now, actually seems insane. But I have a theory on why all of these folks are finally jumping off the fence and into action and it’s probably going to surprise you. 

Markets hate uncertainty. 

A criminal investigation was launched by the Department of Justin Friday into Federal Reserve Chair Jerome Powell. It’s particularly important to understand this investigation is specifically into whether he gave misinformation in a testimony before Congress about a renovation of the Federal Reserve’s headquarters. Not Fed Policy. Not rate cuts. Please also note, Powell isn’t the auditor of the budget for this renovation. There is an independent Officer of the Inspector General that audits project costs, contracts, and compliance. The budget for the renovation of these federal buildings has increased to $2.5 billion dollars.  A big number that is being made even bigger by some sources for whatever reason.   

The Fed’s power comes from perceived independence. Any suggestion that monetary policy could be influenced or pressured injects uncertainty into the markets which bonds don’t react well to. This truly reinforced how fragile any downward moment with interest rates is because we immediately gave back some of the gains we’d seen following Trumps $200 billion dollar announcement. 

Let me cut through the noise on this one. I’m not sure I’m being truly clear here… The investigation into Jerome Powell is not about interest rate policy, QE, or some secret misuse of Fed power - it’s narrowly focused on whether his congressional testimony about a building renovation project accurately reflected projected costs at the time. That’s it. The Federal Reserve is renovating aging, historic facilities that haven’t been meaningfully updated in decades, and like most large construction projects, estimates have risen because of inflation, safety requirements, and unexpected issues like asbestos - not because anyone is installing gold-plated conference rooms. Markets reacted anyway because Fed independence is the backbone of stable mortgage rates: when investors believe policy is driven by data instead of politics, long-term borrowing costs stay lower and more predictable. The bond market’s wobble wasn’t about Powell being in trouble; it was about the risk that monetary policy could be pressured rather than principled. 

Pent Up Demand is REAL. 

There are a lot of nuances to how important The Federal Reserve’s independence is and most of Main Street wasn’t following the investigation and its impact on mortgage rates over the weekend. They saw Trump’s announcement on Thursday and felt the real estate tycoon was finally getting back to his roots and realizing – homebuyers want some relief. Mortgage applications jumped and while I don’t have nationwide data yet, I can tell you I personally had 12 loan apps come in one day. All weekend I was working with clients. Getting pre-approvals sent out, trying to compete in multiple offer situations, and fielding calls from brand new buyers finally ready to get their financing together to make a home purchase. It was a really impactful reminder that interest rates don’t have to crash in order for the competition to return. The perception of cheaper money is all the pent-up demand needs.  

The small improvement we saw in mortgage rates increased buyer confidence, pulled sidelined buyers back into the market and gave bidders the confidence to up their offers and win the deal. That is competition tightening in real time my friends. 

Transition Year 

This further proves that 2026 will be a transition year. Rates will have little dips and then likely be checked by labor market resilience, inflation concerns and with Trump in office – political uncertainty. But when they do hint at improvement, at easier borrowing conditions…activity will follow in a fast and furious way. 

That’s why I’m convinced the winners this year won’t be the ones in the dreamer “what if” or “maybe someday” phase. The winners will be the ones who find themselves prepared and ready to pounce. 

The World is on Fire. 

The World Is on Fire 

I promised you my theory, so here it is. The other headlines this week were heavy. Real estate doesn’t exist outside of that reality…markets are made of human beings who feel what’s happening in the world. 

I think we’re nearing the end of the privilege of pretending politics and daily life don’t touch our decisions. 

What I saw this week wasn’t just a reaction to a $200B announcement. It was people reaching for something stable in an unstable moment. When buyers heard even a hint of relief on rates, they grabbed onto it. Not because the math suddenly got perfect (it really didn’t change all that much), but because hope finally felt practical again. 

The activity we saw wasn’t about a sudden change in affordability. It was about people wanting to move toward the concept of home - safety, ownership, control of their own corner of the world. 

Sometimes markets move on numbers. And sometimes they move because people are tired of waiting for the storm to pass.