monthly macro monitor
key trends for the agency mbs investor
january 2025
- Inflation measures released in January were in-line with prior month readings and consensus estimates, while the labor market showed signs of strength with a larger-than-expected increase in U.S. nonfarm payrolls and a slight drop in the unemployment rate.
- As expected, the Fed did not deliver any material updates regarding the path of monetary policy at its January meeting and maintained the target range for the federal funds rate at 4.25-4.50% in a unanimous decision.
- Agency MBS spreads to benchmark rates were relatively stable in January against the backdrop of declining interest rate volatility and limited Agency MBS supply.
- Over the near-term, however, financial market and macroeconomic uncertainty remains elevated as the new administration implements sweeping changes to tariff, immigration, fiscal, and regulatory policy.
Key Rate and Spread trends
Important Disclosures
Federal funds rate data last updated January 31, 2025. Source: Federal Reserve.
Economic data last updated January 31, 2025. Core CPI and Core PCE exclude food and energy. Source: Bureau of Labor Statistics and Bureau of Economic Analysis.
U.S. Treasury yield curve reflects month-end Treasury yields for each tenor and month shown. Source: Bloomberg.
Agency MBS spread to U.S. Treasuries and Agency MBS spread to swaps reflect the 30-year current coupon Agency MBS yield spread to a 50/50 average of 5- and 10-year U.S. Treasury yields and a 50/50 average of 5- and 10-year SOFR OIS swaps, respectively. MOVE Index reflects the ICE BofA Move Index. Each chart is shown over the trailing 12 months ended January 31, 2025, and each monthly change reflects the difference between January 2025 month-end data and December 2024 month-end data. Source: Bloomberg.
Data and commentary is provided for information purposes only and should not be construed as investment advice.
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