March 24, 2025 · Market Analysis

With Great Uncertainty Comes Great Opportunity

Is the FED put back in play? Did you pick up on the subtle shift at the FOMC last week on March 19? To the casual observer it may have seemed like business as usual, holding rates steady at 4.25–4.5%. But what was it about this meeting that has people feeling a shift — a dovish one, perhaps, by Fed Chairman Jerome Powell?

If you’ve been following headlines this past month, it has been quite the ride. Trump tariffs, global uncertainty, recession fears on top of already growing inflationary risks — all came to a critical level as the market saw a fast-paced sell-off reaching 10% in under 3 weeks. But as in past sell-offs: are we facing structural risks, or merely a shorter-term sentiment shift? To understand the data and where we are, you have to look under the hood.

The Data Beneath the Headlines

Atlanta Fed estimated Q1 GDP numbers caused sensational headlines after being revised from +3.9% in early February, +2% in mid-February, and then cratering to a -2.8% estimate on 3/3. The real cause? Gold imports — record gold imports skyrocketing and throwing off the data. The headlines did their damage and moved on.

CEO confidence dropped to its lowest level in 13 years — lower than the COVID crash, lowest since the Great Financial Crisis of 2008. But again, looking closer, the headlines and the data are not aligned. University of Michigan Consumer Expectations by Political Party show Republicans at a 95.7 confidence level while Democrats are at 28.2 — which has never been lower. This is lower than during the pandemic and 2008 financial crash.

So is it really that simple? Market uncertainty with negative headlines exacerbated to the extreme due to the extreme politically charged environment we find ourselves in today.

The Fed Signal

Going back to the Fed last week: Powell had every opportunity to fan the flames and speak to increased risks. They did not. They kept the projected 2 rate cuts for this year. They re-affirmed inflation projections. They stated that starting in April they will reduce their treasuries taper from $25B/mo to $5B. This means banks and institutions will need to look elsewhere for yield — and because rate cuts are still on the table, those institutions will likely look to MBS (Mortgage Backed Securities). As spreads between 30-year treasuries and MBS narrow to more historical levels (100-125 bps), expect mortgage rates to start dropping in April.

Seattle Market

Buyer confidence remains high and the market has shown further strengthening into March. Reviewing February Seattle sold data, we saw almost 60% of homes sold in under 10 Days on Market (DOM), and 69% sold in under 30 DOM. March pending data is tracking at similar numbers with 59% pending at 10 DOM and 77% at 30 DOM or less. These numbers are extremely strong given the current environment. If we get relief on interest rates — which I think we will — this bodes for an even stronger spring market.

As always, follow the money, not the noise.