Overview
- Friday’s data showed softer payroll growth with unemployment near 4.4%, curbing the likelihood of a January rate cut.
- Barclays and Morgan Stanley pushed expected cuts to midyear, JPMorgan now projects no cuts in 2026 with a hike in 2027, and Bank of America expects no further moves under Powell.
- Bond managers kept leaning into curve steepeners, with the 2s–10s spread recently at a multi‑month high before retracing as traders watch CPI and sizable Treasury auctions.
- Justice Department subpoenas concerning the Fed prompted Powell to warn about threats to central bank independence, with a Supreme Court hearing on a Fed governor’s job set for January 21.
- Fannie Mae and Freddie Mac were directed to buy $200 billion in mortgage bonds, tightening MBS spreads and pulling 30‑year mortgage rates toward roughly 6% for many borrowers.