What Moves Markets Faster - Math Or Stories?

You guys loved it last week when I said stories move markets faster than math does. Human beings tend to have their own versions of the truth, right? That’s especially true in 2026 where we are living a pick your own adventure book daily – here’s the headline or video footage or plain fact, go to page 26 if you’re a liberal, go to page 45 if you are conservative to see what happens next.  

Well we are seeing two of my theories be tested in real time now. The first is that there is in fact pent up demand amongst Americans for homes and that they will latch on to any narrative they can that gives them permission to buy this year. Regardless of if the math on their affordability changes at all. The second theory is that 2026 will be one of the last best entry points into real estate. 

So how are these theories being tested? Stay with me. 

I’m writing this Thursday afternoon because your girl is out of office as you’re reading or watching this. Just kidding, you can totally call me for anything you need because I have zero boundaries and my laptop is coming with me to the Backstreet Boys concert.

On Thursday, today for me, yesterday for you – I’m currently looking at mortgage bonds which are in the green by nearly 40 basis points. That’s a HUGE improvement. It’s in fact remarkably similar to what we saw after Trump made his $200B announcement.  What caused today’s rally? A couple things but the main one is a weak JOLTS report. JOLTS is a report from the Bureau of Labor Statistics that shows job openings. The market was expecting today’s report to show 7.2 million job openings in December of 2025. It came in at 6.5 million, which was the lowest level since 2020, and November was also revised down. 

We are missing a jobs report today from the BLS due to the mini shut down this week. It’s been postponed to next week which is giving some other jobs reports more weight than they usually get. The Challenger Job Cut Report showed 108,000 job cuts in January. That was triple the number of job cuts in December. Then the Revelio private labor market report showed 13,000 job losses in January. ADP showed 22,000 job gains but that was weaker than expected. So some are saying the labor market is showing clear weakness. 

And we know the Fed has only two jobs, right? Keep inflation under control while supporting the labor market. Did this week’s data pave the way for a rate cut? Well, maybe I lied to you about all this data being the main thing causing a rally on mortgage bonds right now. 

You know I’m going to die on this hill of math not moving markets and it being all about the stories and narratives carefully crafted by a couple of guys pulling a lot of strings? 

The main thing moving markets right now could be our incoming Fed Chair Kevin Warsh’s comments about AI. He said he wants to cut rates because he thinks an AI boom will boost productivity so much so that the Fed could cut rates without worrying about inflation. He thinks this looming shock coming from AI will change how we all think about inflation. In his view, if productivity explodes like he thinks it will, the economy can grow fast – incredibility fast – without prices rises. So the Fed wouldn’t have to keep rates high to keep spending under control. 

His logic, step-by-step. 

Inflation is not only about demand right. The other side of that coin is supply. Inflation happens when there is too much money chasing too few goods, so the maker of the good can increase their profit margins without worrying they will lose their buyer pool.  

Warsh is assuming AI will automate what has been expensive white collar work the way machines automated factories. AI will allow fewer workers to produce much more output. This will reduce costs across many industries from logistics to healthcare to finance and even construction. If one worker can do the work of 5 people, labor costs fall. 

Lower costs = less inflation pressure. 

Our previous reality: lower rates = more spending = higher inflation 

Warsh’s bet: Lower rates + surging productivity = non-inflationary growth 

It is kind of a have your cake and eat it too scenario, but I think it just might be realistic. (What do you think?) 

Regardless of what we think, markets seem to be loving it today. 

The Theory Test 

Here’s where I’m going to be tested. We are seeing a similar improvement today in rates from Trump’s announcement, but the difference is – this isn’t as publicized. It’s not going to get as much media attention. Will we still see a jump in mortgage applications like we did after Trump’s announcement? 

Don’t forget the kicker. Trump is his own worst enemy remember? He made that announcement on a Thursday but Friday, they served Powell with a subpoena for an investigation into the Federal Reserve. Markets didn’t like that so by Monday we had given back most of our gains. Buyer activity still continued, with people all over the country waking up to update their preapproval, calling their realtor to sell. They saw that Trump was paying attention to housing affordability and they started packing.  

They had said they were waiting for lower interest rates all along. 

But interest rates didn’t improve for them all that much. Maybe half a point if they locked really quickly at the exact right moment? The math on their affordability was essentially the same as it had been the week before. 

Now I’m watching a similar amount of improvement happen in bonds right now. So for the folks who really mean it about needing a lower rate in order to make a move…the math is mathing right now. 

But will we see a jump in mortgage applications and buyer activity this weekend based on this math? Or is the story, or the person yelling the story, not loud enough here?