For the past two weeks, talk in Yemen's capital, Sanaa, has been of the "situation".

People have left the city, traders in markets complain, because of the "situation"; men who would normally go unarmed carry semi-automatic rifles in the street because of the "situation"; taxi drivers try to push prices up because of the "situation". Yet nobody can fully vocalise what the "situation" is - perhaps because it is as much an expression of what is missing as it is of what is present.

On Tuesday, these tensions seemed to have been eased when Yemeni President Abd Rabbu Hadi Mansour declared his choice of a new prime minister. But instead, the move led to even greater uncertainty as the Houthis quickly snubbed the new candidate, Ahmed Awad Bin Mubarak, on the basis that he was not selected through a consensus decision and that he was an "agent of the US".

"The selection makes a mockery of Yemen's independence and sovereignty as well as the will of the people," the group said in a statement issued shortly after the appointment was made. They promised further 'escalation' of the kind that led to heavy fighting in the capital in September.

The Houthis rejection of Bin Mubarak - who was appointed by presidential decree - raises questions about the fate of the peace deal which ended days of fighting and was supposed to lead to a Houthi withdrawal once a new, neutral prime minister and cabinet were named.

On September 21, Hadi signed the deal with the Houthis, who had just taken control of a major military installation on the western edge of the city. As the agreement, which was aimed at getting the Houthis to leave the capital, was being signed, checkpoints manned by Houthi fighters blossomed across Sanaa.

Two days after the deal was signed, Houthi leader Abdelmalek al-Houthi said the "People's Committees" securing the city would not leave until the military, in disarray after the takeover of Sanaa, was able to fight the local al-Qaeda franchise. Since then, it has been clear who controls the capital.

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Not everyone is complaining though. Although the military is largely vacant, security has been remarkably good, and the electricity supply - down to a handful of hours a day earlier in the year - has been relatively plentiful. As part of the peace deal, the government brought down fuel prices, which had been raised earlier in the year. "[The Houthis] have brought fuel prices down, there is electricity and they want to fight al-Qaeda," said Fouad, a 49-year-old bus driver who shuttles between the Bab al Yemen district of Sanaa and upmarket Hadda. "If that's all they want then they are OK by me."

But others are not so happy. "When the Houthis came, everyone left," said Mohammed Amin, a 20-year-old resident of Sanaa's historic Old City who sells scarves at a small stall in a market inside the walls of the medina. "There are no tourists, everyone has left. Everyone has his own problem but the Houthis are the biggest reason. There are no more people."

In the run-up to Eid al-Adha, a major holiday in the Islamic calendar, the market in the Old City is normally packed. "Before it was so crowded in the shop we didn't know how to deal with the demand," Amin, who has worked at the stall for seven years, explained.

But only a few shoppers came to his stall in the days before the holiday, he says. Yet he cannot say why, exactly, people are so nervous.

"The situation is this," a Yemeni political analyst who lives in Sanaa said bluntly. "No one is in charge."

As the terms of the peace deal were being negotiated on September 21, Yemen's Prime Minister Mohammed Basindwah resigned in the knowledge that he would be replaced as part of the agreement while the interior ministry publicly ordered security forces in the capital to "cooperate" with the Houthis.

Several people with knowledge of the inner workings of the defence ministry say it is now unclear to what extent Yemen still has a functioning army, while the relative ease with which the Houthis took the capital may encourage al-Qaeda in the Arabian Peninsula (AQAP) to attempt to seize its own territory in the south or take the Houthis on in the capital.

Although Basindwah and the rest of the cabinet were told by Hadi to remain in their posts until a new government was appointed, few turned up to work. When Al Jazeera called several key officials including ministers both before and after Eid, the response was the same: During a major political crisis, the most important men in government were either at residences outside of the capital or abroad.

A political vacuum which began with the Houthi siege of Sanaa has now had two weeks to expand. "Yemen's government is largely running on momentum, but that momentum is slowing and soon people will recognise that there is no one at the wheel," said the political observer.

Part of the problem, he says, is that the while the peace deal set out a clear timeline for the formation of a new government - within nine days of the appointment of a prime minister - it did not set a similar strict deadline for the appointment of the new premier. Initially, officials had said that a prime minister would be appointed within a week of the deal being endorsed; then, that a candidate would be approved before Eid, which fell on October 4.

Yemen's government is largely running on momentum, but that momentum is slowing and soon people will recognise that there is no one at the wheel. - Yemeni political observer

The Houthis, who snubbed the president's choice of a prime minister, had twice approached Mohammed Awad Bin Hammam, the Central Bank governor, to take the post; on both occasions, he declined the offer.

On Eid itself, Mohammed al-Basha, the Yemeni government's spokesman in Washington, took to Twitter: "A number of individuals who were nominated through consensus by the political factions declined the offer," he wrote. "Yemen Prime Minister Wanted!"

Following the Houthis' rejection of the president's candidate, Yemenis are now beginning to discuss what will happen if a consensus is not reached over the new prime minister.

"I think arguably the perceived effect of the inability to appoint a PM is greater than the actual effect," said Adam Baron, a London-based Yemen analyst who lived in Sanaa between 2011 and 2014, of the growing vacuum in the capital. "That being said, the inability to [do so] will play a huge role in shaping perceptions of the government, particularly after the end of Eid, raising anxieties over intractable differences and general dysfunction [between the Houthis and Yemen's political class]."

Yemenis are also anxious that the Houthis' move would present President Hadi, the figurehead of their political transition, with a greater challenge than the issues he faces. Hadi, who in reality had a far bigger say in the way the country was run than Basindwah, has become impotent in the face of the Houthis' rise. "Hadi needs to prove that he's still in charge, that he's running the country, that he's president more than in name only," Baron said.

As the vacuum grows, Baron says, the Houthis, a onetime religious revivalist movement for the Zaydi Shia Islam largely unique to north Yemen, now in control of the country's largest militia, need to be sure not to overplay their hand, having been given their first shot at forming and participating in government. "The Houthis' key challenge is managing to further their own interests while inflaming other factions to as small a degree as possible," he said. "Something that, of course, is far easier said than done."