Shutdown Economics: Markets Move on Intuition as Rates and Gas Prices Fall

As of this week, the federal government has been shut down for three weeks—an unusually long pause that has left financial markets operating without the guidance of key economic data. With agencies unable to release reports such as employment, retail sales, and housing starts, traders and analysts have reverted to “old-school” fundamentals: intuition, momentum, and headline-driven sentiment.

In the absence of official data, the bond market has taken its own path. The 10-year Treasury yield has drifted below the 4% threshold, marking its lowest level in nearly a year. Mortgage rates have followed suit: 30-year fixed conventional loans are hovering near 6%, while FHA and VA rates have slipped into the high-5% range. Gasoline prices, meanwhile, continue their downward trajectory across the Southeast, heading toward $2.50 per gallon—a development that should further ease inflation pressures in the months ahead.

These converging trends—lower borrowing costs and falling fuel prices—could be precisely what the “doctor ordered” to reinvigorate a sluggish real estate market. If upcoming Consumer Price Index (CPI) data come in below expectations, the momentum could accelerate, potentially pushing conventional mortgage rates below 6% and FHA/VA loans closer to 5.5%.

For would-be buyers who have been waiting for rates to “break below six,” the window of opportunity may finally be opening. Yet, as history shows, a sudden rise in demand typically leads to upward pressure on home prices. Those who act sooner rather than later are more likely to lock in both a favorable rate and a more affordable home price before the market transitions from a buyer’s market back toward a seller’s market.

Ironically, the lack of fresh government data might be proving beneficial for markets—allowing them to find equilibrium without the noise of constant revisions and political spin. In that sense, this period of silence has revived an older, simpler form of market analysis: Old School Economics—where price action, intuition, and supply-demand dynamics tell the story more clearly than any government report ever could.