Trump Unfavorable to Down Payments

Summary

President Trump has expressed a negative view on down payments, blaming them for the slowdown in home purchases. To address this, his administration plans to announce a policy allowing withdrawals from 401(k) retirement funds to be used for home down payments.Sina Finance The plan is expected to be unveiled by National Economic Council Director Kevin Hassett in Davos next week.Sina Finance This comes amidst Trump’s ongoing pressure on the Federal Reserve to lower interest rates, a stance that some bond managers warn could actually push rates higher by undermining the Fed’s credibility.JIN10+ 2

Impact Analysis

This isn’t about being ‘negative on down payments’—it’s a classic demand-side stimulus disguised as an affordability plan. They’re about to announce a policy letting people use their 401(k) s for down payments.Sina Finance The first-level thinking is this boosts homebuilders, and we might see a pop in those stocks. But the real story is the second-order effect. Injecting retirement funds into the housing market without addressing supply is purely inflationary. It will push home prices higher, worsening affordability in the medium term.

More importantly, this works directly against the Fed. While Trump is publicly attacking Powell for not cutting rates,Sina Finance his own policy is adding fuel to the inflation fire. The bond market sees this contradiction. His rhetoric is already blamed for higher yields.JIN10+ 2 Bottom line: this policy will likely push long-term rates and mortgage rates up, not down. The trade isn’t to buy homebuilders; it’s to anticipate higher inflation and yields. I’d look at shorting long-duration Treasuries.