This morning’s jobs data painted a mixed picture. Nonfarm Payrolls (NFP) came in at +50,000 vs. +70,000 expected, signaling slower job creation. The unemployment rate surprised to the downside at 4.4% vs. 4.5% expected, while average hourly earnings rose 0.4% MoM vs. 0.3% expected, reinforcing wage inflation concerns. The combination of softer hiring and stronger wage growth complicates the Fed’s path forward, as labor market cooling contrasts with sticky wage pressures.
Last night, President Trump announced that Fannie Mae and Freddie Mac will buy $200 billion in agency MBS to inject liquidity and push mortgage rates lower. FHFA confirmed execution plans, and analysts estimate this could trim mortgage rates by 25–50 bps in the near term. The market reaction was swift: UMBS 5s ripped tighter, up over 20 ticks since the announcement, as demand for MBS surged. This is a significant policy pivot aimed at restoring affordability ahead of the spring buying season. Home-lender stocks have spiked, reflecting heightened optimism for origination.
The Supreme Court is expected to rule as early as today on the legality of Trump’s emergency tariffs under IEEPA. A decision striking down the tariffs could trigger $100B+ in refund claims and reshape trade policy, with implications for equities, Treasuries, and consumer prices. Markets are braced for volatility, but as of now, no ruling has been released.
Despite the MBS rally, Treasury yields remain steady, with the 10-year at 4.17%, unchanged from yesterday. Mortgage prices are up 8-10 ticks, pushing rates lower near 6.16%, their lowest since late 2024, and traders expect further downward pressure as GSE purchases ramp up. Liquidity conditions are improving, and risk premiums are tightening, signaling a constructive tone for rate-sensitive assets.
