Fannie, Freddie place large dids for mortgage-backed securities

Core Insights - Fannie Mae and Freddie Mac are increasing their purchases of mortgage-backed securities (MBS) to take advantage of a market selloff and expand their bond and loan portfolios [1][2] - This initiative follows a directive from President Trump to acquire $200 billion in MBS to enhance housing affordability [2] - The increased buying activity may help mitigate rising mortgage rates, which have reached a three-month high due to broader market pressures, including the US-Iran conflict [3] Company and Industry Overview - Fannie Mae and Freddie Mac are significant players in the US mortgage market, purchasing and packaging home loans into securities while providing financial guarantees to buyers [4] - Both entities have been under federal conservatorship since 2008, with their combined holdings dropping from $1.5 trillion to $158 billion by late 2022, but rising to $278 billion as of January 2023 [5] - Following Trump's directive, the MBS market saw a narrowing of yields relative to Treasuries by about 0.2 percentage points, although subsequent purchases by Fannie and Freddie were modest due to compressed risk premiums on many mortgage bonds [6]