Global Tensions Rattle Markets Ahead of Fed Meeting

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Greenland Deal Framework Helped Settle Markets

Late last week, markets calmed after President Donald Trump announced that he and NATO Secretary General Mark Rutte had reached a "framework of a future deal with respect to Greenland". The announcement clarified that negotiations would move forward through economic and diplomatic channels, not military action, and Trump confirmed he would not use force, which many feared after his statements earlier int he week.

The framework eased concerns that tariff threats would escalate into a broader trade conflict. Treasury Secretary Scott Bessent reinforced that message, pushing back on speculation about European retaliation in U.S. debt markets and reiterating that NATO relationships remain intact.

Why it matters for mortgage rates:

We've seen tariff talk push mortgage rates higher by raising inflation risk and uncertainty. When that uncertainty fades, which happened when the framework was announced, rates tend to fall (though not always to as low as where they were before the tariff talk started). That’s what we saw late last week, with upward pressure easing and rates beginning to stabilize, a positive setup for buyers.

Inflation and GDP: Strong Growth, Contained Inflation

Last week’s data showed an economy that’s still growing, but without inflation getting out of hand.

GDP was revised higher to 4.4%, well above expectations, driven largely by consumer activity. But the details matter. Growth came alongside cooling price pressures, not accelerating ones, which is exactly what bond markets want to see.

On inflation, PCE came in  with core PCE at 2.8%. That’s still above the Fed’s 2% target, but it was in line with market expectations and remains stable below 3%. 

Consumer fundamentals were solid. Personal income rose faster than spending, meaning households are earning more without blowing it all at the register. Spending growth slowed modestly, while incomes continued to climb — a setup that eases inflation pressure without signaling economic trouble.

Why it matters:

Strong GDP paired with contained PCE and moderating consumer spending helps keep a lid on Treasury yields. For mortgage rates, that combination supports stability — and keeps the door open for lower rates if upcoming data cooperates.

What to expect this week? Fed Meeting and Powell Press Confernce

This week’s Federal Reserve meeting is widely expected to be a non-event from a policy standpoint. Markets are pricing a 97% probability that the Fed holds rates steady.

As Goldman Sachs’ chief U.S. economist David Mericle put it, the meeting is “likely to be uneventful,” with little change expected in either policy or messaging. Fed officials have repeatedly said policy is “in a good place,” and this meeting is more about patience than action.

Where things get more interesting is outside the Fed room. The meeting could be overshadowed by political developments, including President Trump’s growing pressure on the central bank and the possibility that he announces his pick for the next Fed chair after Powell's term ends this May — potentially as soon as this week.

That matters because Trump has made it clear he wants faster and deeper rate cuts, and a chair nominee aligned with that view could influence market expectations well before any formal policy change. Even so, economists quoted by Reuters emphasized that any new chair would still need consensus from the broader Fed — meaning rapid cuts are far from guaranteed

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