The week began with the release of the Federal Reserve’s January meeting minutes, reinforcing a message investors have heard repeatedly this year: the Fed is in no rush. Even as inflation has slowly drifted closer to the 2% target in recent reports, policymakers remain uneasy about declaring victory. Their view is that last year’s rate cuts need more time to work through the system. Historically, monetary policy takes six to eight months to fully transmit through the economy. From their perspective, they can afford to wait — and they intend to. At least for the moment.
Friday’s Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, did little to change that posture. Core inflation came in more firmly than expected and remains above the Fed’s comfort zone. Inflation is no longer surging, but it is also not cooling fast enough to justify aggressive easing. That leaves markets in a holding pattern. Wall Street still expects the next rate cut around June, but between now and then, every inflation point and economic report will matter. Adding another layer of complexity, the Fed will likely see a leadership transition by early summer. Historically, those transitions tend to make policymakers more cautious, not less. That alone may reinforce the current “wait and see” stance. With that being said, the current administration has made it clear they want to see the Fed move interest rates lower, faster, and more aggressively.
While much of the attention remains fixed on the Fed, housing data continues to quietly send its own signal. According to Redfin, homes sat on the market for an average of 61 days in January — slower than December, slower than last year, and the slowest turnover since 2017. That is not a one-month anomaly; it reflects cooling demand. Higher mortgage rates are clearly weighing on activity. Housing often acts as an early indicator for broader economic momentum, so this trend is worth watching closely in the months ahead.
As the week wrapped up, markets also digested a significant Supreme Court ruling related to trade policy. The Court determined that the broad use of certain emergency powers to impose tariffs was unconstitutional. Tariffs impact supply chains, corporate margins, and consumer prices. If elements of the current structure are revised or rolled back, it could ease some cost pressures over time. However, the path forward remains uncertain and will depend on how policymakers respond. For now, the ruling removes one policy overhang but introduces new questions about what comes next.
Taken together, the start of this year has tested investors’ patience. Today’s GDP report showed the economy grew at an annualized rate of just 1.4%, well below expectations for closer to 2.5% growth. Part of that slowdown was tied to the recent government shutdown, which likely shaved about one full percentage point off overall economic output during the quarter. I would take today’s report as a “one off” given the shutdown. Even accounting for that temporary drag, growth is clearly moderating compared to last year’s pace. That aligns with what we’re seeing elsewhere — inflation progress has been uneven, the Fed remains cautious, and housing demand is cooling. The economy is not collapsing, but it is losing momentum. The next few months will be critical in determining whether growth stabilizes and inflation continues to ease, or whether policymakers face renewed pressure to act.
Interesting to Note
- Housing turnover is now at its slowest pace since 2017, reflecting softer demand.
- Leadership changes at the Federal Reserve historically lead to more cautious decision-making. I’m not so sure that will be the case this time around.
Looking Ahead
- Housing Trends: Watch for continued softness in existing home sales and inventory turnover.
- Fed Communication: Any shift in tone from policymakers could quickly move markets.
- Market Volatility: As expectations shift, short-term swings are likely to remain elevated.
We’re in the heart of winter right now — and interestingly, late February is when many parts of the country historically experience their heaviest snowfalls. In fact, some of the biggest snowstorms on record have occurred not in December or January, but closer to the seasonal turning point toward spring. Winter often saves one last reminder before it lets go. I’m thinking warm thoughts right now!
https://www.cnbc.com/2026/02/20/pce-inflation-december-2025.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.cnbc.com/2026/02/20/supreme-court-trump-tariffs-ruling.html
https://www.cnbc.com/2026/02/19/walmart-wmt-q4-2026-earnings.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.cnbc.com/2026/02/18/fed-minutes-january-2026.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.redfin.com/news/press-releases/redfin-reports-homebuying-and-selling-activity-show-signs-of-life-amid-lower-mortgage-rates/?utm_source=chatgpt.com
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
