Overview
- December jobs data showed softer payroll growth while the unemployment rate fell to about 4.4%, tempering expectations for near‑term easing.
- Yield‑curve steepening remained a favored trade with the 2‑to‑10‑year gap hitting a roughly nine‑month high before partially retracing.
- Major banks revised their paths: JPMorgan now projects no 2026 cuts and a hike in 2027, while Goldman Sachs, Barclays, and Morgan Stanley pushed expected reductions to mid‑to‑late 2026.
- New York Fed President John Williams said policy is near neutral, sees no near‑term need to cut, forecasts 2026 growth of 2.5%–2.75%, and expects inflation to return to 2% by 2027.
- Fed Chair Jerome Powell disclosed grand jury subpoenas he called a threat to central‑bank independence, as markets also assessed the White House directive for $200 billion in GSE MBS purchases that helped pull mortgage rates toward 6%.