Fed drama will come to a head in 2026

Economic Environment - In 2025, the economic landscape was significantly impacted by President Trump's aggressive tariff increases, leading to a 10.5% drop in the S&P 500 Index within two days, followed by a recovery of over 42% by year-end [1] - The Federal Reserve cut its key federal funds rate three times during the year, reducing it to a range of 3.5% to 3.75%, which influenced overall interest rates [7] Federal Reserve Actions - The 10-year Treasury yield decreased from a high of 4.817% on January 14, 2025, to 4.172% by the end of the year, with a brief drop to 3.9% on October 22 [7] - Mortgage rates fell from approximately 7.2% in January to 6.2% as of the latest data, according to Freddie Mac [7] Housing Market - Housing activity showed some signs of improvement in 2025, although it remained stagnant since 2022, primarily due to high prices for existing homes and challenges in developing new housing [8]