Let’s break down what moved markets — and what matters most for broker conversations this week.

A New Fed Chair Narrative Is Taking Shape

The biggest market driver wasn’t an economic report — it was President Trump signaling Kevin Warsh as his pick to succeed Jerome Powell when Powell’s term ends in May.

Markets immediately began recalibrating expectations around what a Warsh-led Federal Reserve could mean for policy, inflation tolerance, and longer-term rate behavior.

It’s worth reinforcing an important point brokers often need to explain to clients:
The Fed does not set mortgage rates. Mortgage pricing is driven by bond markets, inflation expectations, and economic growth. Fed policy influences those forces — but indirectly.

We’ve broken this disconnect down before for brokers navigating Fed-week volatility:
Read how brokers should prepare for Fed-week market swings
https://acralending.com/news-events/

Why Warsh Has Markets Paying Attention

Kevin Warsh represents a philosophical departure from the Fed’s post-2010 playbook. Since leaving the Fed in 2011, he’s been openly critical of quantitative easing and has opposed the Fed’s involvement in purchasing Treasuries and mortgage-backed securities.

He has argued for:

• Shrinking the Fed’s balance sheet
• Lowering the Fed Funds rate without asset support
• Letting economic growth run stronger without assuming it automatically fuels inflation

For brokers, this matters because policy tone shapes bond market psychology, even before any official changes occur. Markets are forward-looking — and they’re already beginning to price in what could change.

Economic Growth Remains a Complicating Factor

At the same time, the U.S. economy continues to show resilience.

GDP growth over the past two quarters has exceeded 4%, and the most recent ISM Manufacturing PMI marked its first expansion reading since January 2025. That kind of data makes it harder for the Fed to justify near-term easing, even as inflation shows signs of moderating.

For brokers, this reinforces a key reality:
Rate movement may stay range-bound, even with policy shifts looming.

This is exactly the type of environment where deal structure and program flexibility matter more than timing headlines.

Where Brokers Are Finding Opportunity Right Now

In markets like this, many brokers are leaning on DSCR, Bank Statement, and other Non-QM programs to keep borrowers moving forward despite uncertainty around rates and Fed timing.

See how Acra Lending supports Non-QM and investor scenarios
https://acralending.com/news-events/

Government Shutdown Noise, But Key Levels Hold

A brief government shutdown delayed several data releases, including Friday’s Jobs Report. With fewer fresh inputs, the 10-year Treasury remained stubbornly above 4.20%, a level that has capped further improvement in mortgage pricing for weeks.

For brokers, this reinforces the importance of:

• Managing borrower expectations
• Avoiding overreaction to single headlines
• Watching confirmation from inflation and labor data, not speculation

Why Rate Cut Odds Still Look Like a Coin Toss

CME Fed Funds futures currently price the next rate cut around June — and even that remains uncertain.

Markets are balancing:

• Strong growth data that argues for patience
• The possibility of future policy shifts at the Fed
• Incoming inflation data that could tip sentiment either way

Until inflation provides clearer direction, conviction will remain limited — and volatility around data releases is likely to stay elevated.

What Brokers Should Watch This Week

The upcoming week brings several high-impact events:

• January Jobs Report
• January CPI and Retail Sales
• Heavy Treasury supply, including 10-year and 30-year auctions

How investors respond to this bond supply will be critical. Strong demand could help keep mortgage pricing stable, while weak demand may introduce short-term pressure.

Bottom Line for Brokers

This market isn’t about reacting — it’s about positioning.

Policy shifts, solid economic growth, and pending inflation data are creating a tight but workable environment where brokers who educate, structure, and guide clients clearly will stand out.

Staying proactive — and focusing on execution rather than headlines — remains the winning strategy.