Bonds rallied in overnight trading. The move was exceptionally linear, without any obvious regard for movement in equities or European bonds. Yields were at session lows ahead of the 8:30am data, but have moved steadily higher afterword.  The early weakness almost perfectly offsets the overnight gains, leaving bonds close to unchanged heading into the PM hours.

GDP and Jobless Claims could equally contribute to the move.  Although GDP came in weaker than expected, the “whisper” numbers were lower as traders expected an even bigger hit from a rush of pre-tariff import activity.  The jobless claims result was more straightforward as 2025 has now dropped to the lowest level of non-adjusted, week by week jobless claims compared to recent relevant years.

The National Association of Realtors (NAR) released its Pending Home Sales Index (PHSI) for December this morning.  Pending sales measures the number signed purchase contracts for existing homes. As such, the index is a good early indicator for Existing Home Sales in the coming month. Pending sales dropped 5.5% from last month, which was the highest level for the index since April 2023. Sales had also been on a 4 month winning streak.  In other words, sales activity remains in solid territory, in the upper middle portion of the range over the past year.  As is the case with most housing-related metrics, that range is at historically low levels.  Regional breakdown of monthly and (year-over-year changes):
Northeast 

-8.1% (-1.3%)

Midwest

-4.9% (-6.9%)

South

-2.7% (-5.1%)

West

-10.3% (-5.1%)

Mortgage experts were expecting the first FOMC meeting under President Trump would have more significance in the long run than short-term, with some wild cards.

Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate President Donald Trump’s policies.

Members whose districts include Altadena and Pacific Palisades are behind the measure, which calls for an initial 180-day forbearance period.

The former CEO of the Broker Action Coalition left that post after 10 months following that group’s split from the Association of Independent Mortgage Experts.

Mortgage 1 Inc., founded in 1994, says customers and regulators have mistakenly contacted it instead of Mortgage One Funding, which changed its name in 2021.

Uneventful Fed Day, Bonds Eventually Agree

There’s never a way to know with certainty that a Fed announcement will be uneventful, but if we had to assign relative probabilities, today’s looked much more likely than normal to pass without a trace. In the immediate wake of the announcement, that didn’t look like it was going to happen. Bonds sold quickly due to what seemed to be a notable verbiage change.  Then in the press conference, Powell clarified the verbiage change and bonds unwound their initial reaction. MBS and Treasuries thus ended the day perfectly in line with pre-Fed levels, like it never even happened.  

Market Movement Recap

10:17 AM Modestly stronger overnight and flat so far.  MBS up 2 ticks (.06) and 10yr down 1.1bps at 4.523

11:20 AM Into negative territory now.  10yr up half a bp at 4.54 and MBS down 1 tick (.03).

02:43 PM Initially weaker after Fed announcement, but recovering a bit during press conference.  MBS down an eighth and 10yr up 3.3bps at 4.568

The bank anticipates recent changes will help it rebound soon from a quarter in which commercial-loan distress grew and a sale of the company fell apart.

Nearly two-thirds of Americans said stubbornly high mortgage rates are keeping them from moving, so they are planning to fix up their homes, Angi found.