Episode summary
What does Warsh as Fed chair mean for mortgage rates?
HousingWire Daily
· · 13 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Kevin Warsh’s nomination as the next Fed chair is framed as a loyalty pick that could make Fed communications sound more dovish, but not as a reset that would automatically drive mortgage rates sharply lower. Logan Mohtashami argues that Warsh is effectively “Kevin Warsh 2.0” under Trump: someone who will sound more supportive of easier policy, but still remain constrained by the economic data and the bond market.
Mohtashami says the market has already priced in a lot of neutral policy, so the 10-year yield should mostly stay in its recent channel unless the labor market weakens or reaccelerates. He warns that it is still hard to get the 10-year yield much below 3.80% in a neutral-policy environment, and says it is hard to get mortgage rates below 5.75% without a real deterioration in labor data.
The main takeaway for housing is that the pick may change the tone of future Fed pressers, but it does not change the basic rate outlook by itself. Mohtashami says spreads have improved and mortgage pricing has been relatively stable, so the big swing factor remains incoming labor-market data, not the chairmanship alone.
Key takeaways
- Logan Mohtashami says Kevin Warsh would be a more dovish-sounding Fed chair, but not a person who can unilaterally force mortgage rates lower.
- Mohtashami argues the 10-year yield is likely to stay in its current range unless labor data materially weakens or reaccelerates.
- He says it is very hard to get the 10-year yield below 3.80% under neutral policy, and hard to get mortgage rates below 5.75% without weaker labor data.
- Mohtashami expects mortgage pricing to stay relatively stable because spreads have improved and volatility has compressed.
- He warns that the real driver of rates remains economic data, not the chair nominee alone.
Notable quotes
“Kevin Worsh 2.0. That's kind of what I'm saying”
“for all of us that have known Kevin, this would literally be the most opposite pick from what Trump wants”
“all this is is you're going to have a new Fed chairman that's going to be doubbish where Jerome Powell wasn't”
“the Fed chairman cannot unilaterally do anything but there'll be more of a dovish theme”
“it's really hard again going back all the way to 2022 to get under neutral policy”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Moto Shami to talk about Trump's pick of Kevin Worsh for the next Fed chair and what that means for mortgage rates. As always, I want to thank our sponsor Trust and Will for making this episode possible. Logan, welcome back to this special episode of the Housing Morrow Daily podcast, especially uh with this big announcement. And I know that you're sick, too. So, thank you for joining us.
Kevin Worsh 2.0. That's kind of what I'm saying. It's um last night we had a lot of drama because the 10-year yield was at 423 and then it shot up higher.
It went up to 428. Now, it's back down to 425. So, only a little bit higher after the news.
Uh just for everyone, uh Kevin Walsh is one of the more hawkish Fed people this century. So for all of us that have known Kevin, this would literally be the most opposite pick from what Trump wants. Like you cannot get any more to the other side of what Trump wants today.
But Kevin Wars 2.0 and everyone has to realize Kevin Kevin's family and Trump's family have known each other for decades. So that's not he married himself to the Estee Lauder family. So the ties go all the way back to Wharton.
Kevin Warsh as soon as Trump was in power has changed his tune 100%. So I am I understand with all my financial friends who are listening to this, I totally get it. I was hashtag anyone but Warsh.
There's a lot of things that we and the financial community do not think he's, you know, would be a legit person, but as long as Trump is president, he will do what Trump wants.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed chair nomination
- mortgage rates
- kevin warsh
- trump pick
- federal reserve
Watch the episode
Watch “What does Warsh as Fed chair mean for mortgage rates?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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