Market Analysis 1.9.26: Bonds Jumped

Good Friday AM from your Hometown Lender,

Yesterday was a boring day with almost no movement in bonds… until about 4:40pm when mortgage bonds jumped almost +40bps on news that President Trump posted on Truth Social that Fannie Mae and Freddie Mac had $200 billion in cash and that he was “instructing his Representatives” to buy $200 billion in mortgage bonds to drive down rates. That set the mortgage bond market on fire to end the day, although the 10-yr yield didn’t move an inch. This unseen turn of events totally flipped the script, basically making this morning’s BLS jobs data a back burner, and kicked the door open to move from a locking stance to a floating stance.

Speaking of this morning’s jobs data, there were 50k jobs created, less than expected. Unemployment though fell to 4.4%, lower than even the 4.5% expected after coming in at 4.6% on the last report. The report really isn’t good for rate sheets, and if not for the hoopla surrounding the Trump post, we likely would be seeing worse rate sheets because of it. Treasury yields rose as traders became even more convinced there will be no Fed rate cuts in January or March.

Market analysis – from a higher level:

Market analysis – quick snapshot (for the skimmers)

Rates: Freddie Mac’s weekly survey (1/8) shows 30-yr fixed 6.16%, 15-yr 5.46%. We’re squarely in a low-6s world for well-qualified borrowers. Freddie Mac+1
10-yr Treasury: Hovering in the low-4s (recent prints ~4.15–4.18%), which keeps mortgage pricing range-bound. AP News+1
Economy: Services expanding (Dec ISM 54.4) while manufacturing is softer (Dec ISM 47.9)—classic “slowing, not stalling.” Institute for Supply Management+1
Big catalysts: December CPI hits Tue., Jan 13; labor market cooled in December (about 50k jobs), adding “downside growth / upside inflation risk” cross-currents. Bureau of Labor Statistics+1
Policy watch: New 2026 conforming loan limit = $832,750 baseline; FHA limits lifted accordingly. The White House floated a $200B GSE MBS-buying plan—details TBD. ft.com+5FHFA.gov+5Freddie Mac+5

Rates & the 10-year (what changed)

Freddie PMMS (1/8): 30-yr 6.16% (from 6.15% a week ago); 15-yr 5.46%. A year ago: 30-yr, 6.93%—meaningfully better year-over-year. Freddie Mac
10-yr UST: Sitting near ~4.17%; absent a surprise CPI next week, that keeps daily rate sheets steady with intraday wiggles. AP News

Plain English: think low-6s for a clean 30-yr fixed with normal points/costs. Not the 7s we feared last year, not the 3s of yore—a middle lane you can plan around.

Market analysis – why it’s happening (data • Fed • politics)

1) Data: steady services, softer goods, cooler hiring

Services PMI (Dec): 54.4—broadly supportive of growth; demand indicators improved. Manufacturing PMI (Dec): 47.9—contraction territory. Institute for Supply Management+1
Jobs (Dec): ~50k payroll gain, unemployment 4.4%—a cool print that tempers growth expectations without screaming recession. ft.com
Implication: This mix tends to cap long yields unless inflation re-accelerates.

2) The Fed: easing bias, but not a straight line

Markets expect additional Fed cuts during 2026, but the CBO baseline still sees 10-yr yields ~4.1–4.3% over the next few years—translation: mortgages don’t magically melt into the 4s. AP News

3) Politics & housing policy: near-term levers to watch

Conforming loan limits (2026): Baseline $832,750; high-cost and multi-unit tiers scaled up—expands conforming access. FHA raised its floor/ceiling in lockstep. Scotsman Guide+4FHFA.gov+4FHFA.gov+4
Proposed $200B MBS purchases by GSEs: Administration says the goal is nudging mortgage rates down; impact depends on execution/timing and investor reaction. Could tighten MBS spreads at the margin; details are scant. Wall Street Journal+1
Industry rules: Ongoing NAR/MLS policy updates keep shaping listing/comp flows and buyer-rep practices—local implementations matter for on-the-ground dealmaking. NAR+1

Market analysis – what it means (buyers • agents • homeowners)

Buyers

You’re shopping in a low-6% rate world with a steady-services economy. Use seller credits → permanent buydowns or a targeted 2/1 only when the math really pencils. Anchor on monthly payment + reserves; keep a realistic “refi-if-it-pencils” plan post-CPI/Fed.

Agents / REALTORS®

Re-engage anyone who ghosted at 7%+. Wins are coming from structure: credits to perm buydowns, selective temp buydowns, and contract terms that protect cash buffers. Flag the higher 2026 loan limits to widen options for borderline jumbo buyers. FHFA.gov

Homeowners

≥7% loans: A move to the low-6s may cash-flow—check breakeven and time-in-home.
In the 5s: A straight rate-and-term likely doesn’t pencil; compare cash-out vs. HELOC vs. hold to preserve a cheap first lien.

Lock vs. float (framework, not fortune-telling)

Close ≤ 30 days: Lean lock-biased into next Tuesday’s CPI—negative surprises usually worsen pricing faster than positive surprises improve it. Bureau of Labor Statistics