As Trump’s Greenland aspirations continue unabated, measurable fallout is increasing. Part of the strategy is increased tariffs. EU is also planning/threatening retaliatory tariffs as well as suspending talks on the US/EU trade deal. The latest measurable manifestation of this morning’s fallout is the announcement that a Danish pension fund is liquidating its Treasury holdings. While the dollar amount isn’t huge, it speaks to the risk that other EU countries could follow suit.  Granted, this could create problems for those EU funds, but rationality doesn’t always prevail amid geopolitical brinksmanship. In addition to all of the above, debt drama in Japan is playing a supporting role, causing a massive surge in Japanese yields overnight and a bit of sympathy selling in US Treasuries.

The ex-employee was accused of violating conflict of interest rules and submitting falsified documents for $1.7 million worth of loans in her six-month tenure.

Hartford, Connecticut, topped Zillow’s list of the hottest housing markets this year on the back of its nation-leading home-price appreciation forecast.

Freddie Mac’s investment in affordable housing increased by 17% in 2025 compared with the year prior, the government-sponsored entity said.

Federal Reserve Vice Chair for Supervision Michelle Bowman warned that labor market conditions could weaken further and said the central bank should avoid signaling a pause in monetary policy.

A Community Home Lenders of America adds arguments against use of single bureau while another paper takes the position that the idea merits further study.

Shares of Fannie Mae and Freddie Mac extended days-long losing streaks amid mounting unease about the impact of President Donald Trump’s policy moves on efforts to release the mortgage-finance giants from government control.

A consumer retreat contributed to the trend, which may be getting a closer look as the Trump administration weighs a ban on institutional purchases.

10yr Yields Finally Break The Range

Despite an absence of market movers on the calendar, bonds found a reason to move. In fact, 10yr yields staged their first legit breakout from the narrow trading range of the past 4 months.  Whether that has any implications for the future is a debate for technical analysts to have with fundamental traders. There was an extra little jolt of mid-day weakness when Trump suggested Hassett was out of the running for the Fed Chair nomination, but the day’s bond losses would still be better-characterized as gradual and non-event-driven. MBS outperformed yet again for the same old reason (actual and/or anticipated GSE MBS purchases), but nonetheless ended the week at the lows.

Econ Data / Events

Industrial Production (Dec)

0.4% vs 0.1% f’cast, 0.2% prev

Market Movement Recap

10:58 AM Losing ground from flat, opening levels.  MBS down 5 ticks (.16) and 10yr up 4.1bps at 4.215.  

12:48 PM Off the weakest levels in MBS, now down 3 ticks (.09). 10yr near weakest levels, up 4bps at 4.214

02:18 PM Down to new lows. MBS down 5 ticks (.16) and 10yr up 5.6bps at 4.23

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