Media Panic vs. Market Reality
The real story behind this week’s headlines.
Join me in our ‘Weekly Market Update’ to decipher what to expect in the coming weeks & months.
Happy Friday! Brian Manning here with the weekly update. Let’s get right to it.
Monday was a quiet day since it was President’s Day and the markets were closed. It’s almost like a national holiday in Colorado because so many people go skiing. Unfortunately, the roads weren’t great this weekend, but I hope anyone who took off for the holiday had a great time.
Tuesday was a relatively quiet news day, so not much to report there.
Wednesday was definitely the big day this week.
The first major report we got was on housing starts, which tracks the number of new homes that began construction. The media tore this apart because housing starts were down 9.8% month over month. But let’s take a closer look—this report compares January’s data to December’s. And in December 2024, housing starts were at their second strongest level of the entire year. So, it’s not surprising to see a lower number in January. I’ve said this before—you have to be careful with the media. They love doom and gloom, so sometimes you have to dig deeper to get the full picture.
The biggest news of the week, though, was Wednesday’s release of the Federal Reserve meeting minutes. After each Fed meeting, they release detailed notes about what was discussed, and this time, the most important takeaway was their discussion about stopping the balance sheet runoff.
Let’s take a step back—during COVID, the Federal Reserve stepped in due to the economic threat and implemented quantitative easing, which meant expanding their balance sheet by buying mortgage-backed securities and U.S. Treasuries. Eventually, they said, “No more quantitative easing,” and shifted to quantitative tightening—meaning they not only stopped buying mortgage-backed securities but also started selling them off.
By mid-last year, the Fed adjusted its policy, setting a monthly cap of $35 billion in mortgage-backed securities and $30 billion in U.S. Treasuries for its sell-off.
This week, Scott Besson, along with the Fed minutes, essentially confirmed that quantitative tightening is coming to an end. In fact, they attached a date for the first time, stating that the balance sheet runoff will likely stop by mid-2025.
Here’s why that matters:
As homes are sold and mortgages are refinanced, the Fed currently removes those mortgage-backed securities from its balance sheet. Going forward, rather than letting them disappear, they will reinvest that money into U.S. Treasuries.
While this isn’t full quantitative easing, it does mean that if the Fed stops selling mortgage-backed securities and starts reinvesting in Treasuries, we’ll likely see the 10-year Treasury yield move lower—and mortgage rates will eventually follow.
The bond market loved this news, and as a result, we saw mortgage rates improve this week. The market has been waiting for clarity from the Fed, and we finally got it, which is great to see.
That’s the big news for the week!
I’m around all weekend—if you have any questions, let me know. I’m available seven days a week from 8:00 AM to 8:00 PM.
Realtors: We’re wrapping up our Winning the Listing Presentation series. We’ve completed six so far, with upcoming sessions in Boulder, Denver, Fort Collins, and Colorado Springs—and then we’re done!
After that, we’ll be rolling out fresh new content. Our next presentation in Boulder is in two weeks, and it’s already half sold out. If you’d like to attend, please RSVP soon—these classes have been selling out quickly. We’d love to see you there!
Hope you have a great day!
________________________________________________________________________________
Questions? Concerns? Ready to get started with my strategic buyer consultation?
Call me any day of the week, Monday- Sunday to get connected & learn about your options.
It’s never too soon to understand what you can afford!
303-500-3839
Brian@BrianManningTeam.com
LICENSED TO SERVE YOU IN:
- Colorado
- California
- Arizona
- Illinois
- Florida
- Wyoming
Oh yeah, want to get my weekly Friday Market Update straight in your inbox?? Join our mailing list!
Email me directly at Brian@BrianManningTeam.com