Trump Launches His Own QE: Directs GSEs To Purchase $200 Billion In Mortgage Bonds

Core Viewpoint - President Trump is initiating a $200 billion purchase of mortgage bonds to reduce housing costs ahead of the November midterm elections, aiming to lower mortgage rates and monthly payments [3][5]. Group 1: Actions and Announcements - Trump announced the purchase of $200 billion in mortgage bonds to make homeownership more affordable [3]. - The Federal Housing Finance Agency director stated that Fannie Mae and Freddie Mac will execute the bond purchases quickly, emphasizing their capability and cash reserves [5]. - The announcement follows Trump's previous statement about banning institutional investors from buying single-family homes, indicating a focus on housing affordability as a political issue [8]. Group 2: Financial Implications - Fannie Mae and Freddie Mac have significantly increased their retained portfolios by over 25% in the five months leading to October, suggesting a strategy to lower lending rates and enhance profitability [7]. - The bond purchases are expected to lead to a rally in mortgage-backed securities relative to Treasuries, indicating a positive market reaction [5]. Group 3: Broader Economic Context - The White House is reportedly drafting an executive order to address cost of living frustrations, including allowing access to retirement and college savings for home down payments [9]. - There are concerns that increasing demand through such measures could counteract the intended effects of lowering mortgage rates, potentially leading to more market interventions [10].