Core Viewpoint - President Trump's proposal to purchase $200 billion in mortgage-backed securities is facing significant criticism from economists, who warn that it may worsen housing affordability in the long term despite potentially lowering mortgage rates temporarily [1]. Group 1: Economic Concerns - Economist Mohamed El-Erian highlights that the proposal revives concerns about political interference in monetary policy, particularly through the use of funds from government-sponsored enterprises Fannie Mae and Freddie Mac [2]. - El-Erian also notes that political pressure on the Federal Reserve may extend beyond interest rate adjustments to include asset purchases, which he refers to as "People's QE" [3]. - Growing public anxiety over housing affordability is expected to lead to more aggressive policy responses, according to El-Erian [4]. Group 2: Long-term Implications - Economist Peter Schiff criticizes the proposal, stating that using $200 billion to buy mortgage bonds reduces the funds available for purchasing Treasuries, potentially leading to higher Treasury yields and inflation in the long run [5]. - Schiff argues that the fundamental issue in the housing market is not high mortgage rates but rather high home prices, suggesting that the proposal may exacerbate the problem by allowing buyers to overpay for homes [6]. Group 3: Unusual Intervention - Nick Timiraos from The Wall Street Journal points out the unusual nature of this intervention, noting that it occurs during a period of solid economic activity without systemic risks, indicating a political motivation behind the move [7]. - Timiraos emphasizes that previous Federal Reserve purchases of mortgage-backed securities were made without profit motives and resulted in significant losses during the COVID-19 era [8]. - Following the announcement, prominent real estate stocks, including the Vanguard Real Estate Index Fund ETF and Opendoor Technologies Inc., experienced a rally in after-hours trading [8].

Japan’s government bond market is set for another tough year as investors contend with the largest net increase in supply in well over a decade. The nation’s sovereign debt - the worst performer among the world’s biggest markets last year - faces an 8% rise in net supply to about ¥65 trillion ($415 billion) in the fiscal year starting in April. This is according to Bloomberg analysis that accounts for the Bank of Japan’s reduced purchases and debt that will mature and be redeemed by the government. Most ...

Treasuries rose to kick off the week after a report signaled a weakening US economy, with investors targeting a move in the benchmark 10-year yield below 4% in the coming weeks. Yields closed three to four basis points lower, with the 10 year at 4.16%, following an unexpected drop in the December ISM manufacturing gauge. Yields whipsawed throughout the day in the wake of the US capture of Venezuelan President Nicolás Maduro over the weekend and gyrations in oil prices. The ISM gauge drew a “measured resp ...

GROUP BREAKING DOWN THE RETAIL SECTOR AND VERONICA CLARK OF CITIGROUP EXPECTING UNEMPLOYMENT UP IN DECEMBER. WE BEGIN WITH STOCKS EDGING LOWER WITH PRECIOUS METALS TURNING VOLATILE AS MATT WAS SAYING. JAY PELOSKY OF DPW ADVISORY WRITING "WE THINK NEXT YEAR MIGHT BE THE YEAR WITH THE DOWNSIDE OF A SMALLER U.S. TRADE DEFICIT BENEFITS AND A WEAKER U.S. DOLLAR. A WEAK DOLLAR SHOULD SUPPORT COMMODITIES." J JOINS US.HAPPY HOLIDAYS. IT IS A REALLY IMPORTANT POINT. THIS IDEA THAT WHAT WE ARE SEEING IN COMMODITIES H ...

Treasuries advanced as softer-than-forecast US inflation data bolstered expectations that the Federal Reserve will cut its benchmark interest-rate at least twice next year. The policy-sensitive two-year yield fell about two basis points to 3.46% and touched the lowest since October as the figures underscored the case for more Fed cuts amid signs of a cooling labor market. The 10-year yield fell about four basis points, to 4.11%. Most Read from Bloomberg The consumer price-growth figures out Thursday, ...

Given the rise in interest rates since March 2022, income-oriented assets have become more attractive for those looking to earn a reasonable yield from their investments. Building a portfolio that includes a variety of assets capable of generating an aggregate yield is often a sound approach, as opposed to investing in a single product or security. While a financial advisor can help you build a robust portfolio, here are a few options to consider:It is possible that after thinking through these questions yo ...

(Bloomberg) — The big debate in the US Treasury market over the extent of Federal Reserve interest-rate cuts ahead is about to heat up with a string of pivotal economic data releases. This week will go a long way to filling in the data void created by the US government shutdown, with the delayed announcements of monthly employment and inflation figures, and then early January brings more key jobs data. The reports will help answer the overarching question entering 2026 of whether the Fed is close to being ...

Correspondent Products, STRATMOR on Borrower Psychology; Lender Tools; DSCR Appraisal Issues in Baltimore “What happened with the DSCR appraisal issue in Baltimore earlier this year?” Good question. Baltimore is not alone: This week we have investors either pricing themselves out of, or ceasing loans from, the Philly market for certain non-owner loans.) The whole Baltimore thing seems to have quieted down, and up until recently the last news coming in October although this week along came, “Baltimore is st ...

Treasuries rose for a second session as traders maintained wagers on additional rate cuts next year after a Federal Reserve meeting that proved less hawkish than anticipated. Yields fell across most tenors, with the rate on benchmark 10-year notes touching the lowest level in nearly a week before closing little changed. It was an extension of gains that started Wednesday after Fed Chair Jerome Powell downplayed dissenting votes on a quarter-point interest-rate cut, and officials said they would start buyi ...

Economic Outlook - JP Morgan Asset Management anticipates a resilient U.S. economic expansion in 2026, characterized by a K-shaped recovery where wealthier households and capital-rich corporations thrive, while middle-income consumers and rate-sensitive sectors like housing struggle [1] - The firm projects real GDP growth to be above 3% in the first half of 2026, tapering to approximately 1% to 2% later in the year, with inflation expected to rise towards 4% year-over-year before decreasing to 2% by year-end [1] Interest Rates and Market Strategy - The bank maintains a conservative outlook on interest rate cuts, predicting a "more patient" Federal Reserve due to persistent inflation around 3% and tariff impacts, with 2-year Treasuries expected to yield between 3.5% and 3.75% and 10-year yields in the 4.0% to 4.5% range [2] - Market participants are advised to focus on duration rather than direction, emphasizing income in fixed income investments tied to strong corporate, consumer, and municipal balance sheets [3] Investment Themes - JP Morgan identifies four structural themes for investors to consider: 1. **Tariffs**: Increased U.S. tariffs are generating over USD 29 billion in monthly revenue, with expectations that costs will be passed to consumers, temporarily raising inflation [8] 2. **Immigration Policy**: A decline in net immigration may lead to a contraction in the working-age population, stabilizing unemployment but limiting job growth and long-term GDP [8] 3. **AI Investment**: Projected data-center and AI capital expenditures are expected to reach approximately USD 588 billion in 2026, representing about 1.2% to 1.3% of U.S. GDP, with AI being a key driver of earnings strength [8] 4. **Global Focus on Shareholder Returns**: An increasing emphasis on buybacks and higher dividends is becoming more prevalent globally, as Europe and Asia adopt policies similar to those in the U.S. [10] Global Market Dynamics - International equities outperformed U.S. equities by about 1,520 basis points in 2025, with potential for further catch-up as the U.S. dollar remains 10% over its fair value and the U.S. equity premium over international markets stands at 34% [5] - The U.S. accounts for over 65% of global benchmarks and 40% of domestic market capitalization in just 10 companies, suggesting a gradual rotation towards select value and international markets while maintaining exposure to AI leaders [6]