Market Movements - January 12th, 2026

[Andrew Postell]

What a Long, Strange Week It’s Been

Policy Shifts and Market Dynamics

President Trump ordered Fannie Mae and Freddie Mac to purchase $200 billion in agency MBS, aiming to compress mortgage spreads and lower housing costs. This move bypasses Congress and only requires an amendment to the Preferred Stock Purchase Agreement (PSPA), which should be straightforward. The impact was immediate: MBS spreads tightened roughly 10–15 bps on announcement, and analysts project 25–50 bps tighter versus Treasuries as purchases ramp up. UMBS 5s rallied sharply, and 30-year fixed mortgage rates dipped toward 6.16%, their lowest since late 2024. While supportive for affordability, this directive raises concerns about GSE capital buffers and systemic risk if housing markets soften later in 2026.

Leadership and Legal Pressures

The Department of Justice issued grand jury subpoenas to Fed Chair Jerome Powell and senior officials, tied to testimony on a $2.5 billion renovation project. Powell called the probe a “pretext” for political pressure to cut rates, fueling fears over Fed independence. Market sentiment turned risk-off, with a “short America” tone emerging as investors rotated out of equities into gold and crypto. S&P futures were down about 0.6%, gold hit record highs above $4,600, and Bitcoin briefly topped $91K.

Data Outlook

Key data releases include U.S. CPI on Tuesday and retail sales on Wednesday, with consensus expecting core CPI at 0.2% month-over-month and headline near 2.7% year-over-year—critical for rate-cut expectations. Earnings season kicks off with major banks reporting Q4 results, including JPMorgan, Citi, and Bank of America. Geopolitical developments around Venezuela oil flows and Iran tensions could influence energy prices and risk sentiment.

Mortgages are starting the week where they left off Friday, holding gains from the post-GSE purchase announcement RipFest. Treasury yields, as you would expect, are somewhat muted with the 10yr yield up to 4.19%. Stocks, as previously stated, are starting the week slightly lower.

WEEKLY INTEREST RATE SNAPSHOT

*National average rates are provided by Bankrate.com and Bloomberg Professional as of 1/12/2026 and are not advertised rates from Rate, Inc.

Stay informed and have a great week ahead!

Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate, Inc. does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.

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