Trump’s grand plan for housing relies on his Fed pick. Here’s why.
Trump’s plan to lower mortgage rates, Glencore and Rio Tinto in mega-merger talks, General Motors takes another big EV charge, and more news to start your day.
So much for a quiet first week of the new year. President Donald Trump is looking to micromanage various sectors of the market, but his pick for Federal Reserve chair remains the most important economic intervention the president can make.
Housing costs are one of the chief concerns for Americans. After targeting house prices with the proposal to ban institutional investors from buying family homes, now Trump is hoping to push down mortgage rates by getting Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, almost doubling their current holdings. It’s another sweeping government intervention by a Republican administration that is supposed to be an advocate of free markets.
Tackling housing has advantages over some of the other sectors that have attracted the president’s attention in having few apparent legal obstacles, while the benefits could be seen relatively quickly. Analysts at UBS estimate such purchases could reduce the current 30-year headline mortgage rate to around 6.0% from around 6.21% currently. The acquisitions wouldn’t breach the cap on Fannie and Freddie’s holdings.
Traders are rushing to get ahead of White House policy, bidding up shares of house-flipper Opendoor Technologies and mortgage lender Rocket Cos. in premarket trading, Friday, as well as the home-builder sector more generally. But with home prices up more than 50% nationally since 2019 and mortgage rates having more than doubled since the lows of 2021, it could need something extra to get the housing market moving again.
Inevitably attention will turn to the Fed and who will replace Jerome Powell as chair from May. Expectations for monetary policy influence the direction of the 30-year fixed mortgage rate. Trump has explicitly blamed a sluggish property market on Powell’s reluctance to cut rates as quickly as the president wants
The announcement of who will lead the central bank looks imminent, potentially later this month, according to Treasury Secretary Scott Bessent, although Trump says he has already made up his mind which could mean an earlier decision. Whoever takes the helm, it’s a safe bet they will have told Trump what he wants to hear when it comes to mortgages.
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Trump’s Plan to Lower Mortgage Rates: Buy Mortgage Bonds
The administration is taking another stab at the affordability issues weighing on many American households. President Donald Trump has set out to battle high mortgage interest rates and thereby ease pressure on would-be home buyers by directing his “representatives" to buy $200 billion in mortgage bonds.
Bill Pulte, who heads the Federal Housing Finance Agency, said Trump had authorized the securitization companies Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities, which Pulte described as the largest mortgage bond purchase in the companies’ history.He didn’t say at what pace the companies would buy the bonds. But Pulte said they are “already in the market" and the purchases didn’t require an amendment to the contracts governing control of Fannie and Freddie, which is allowing them to move quickly.Fannie and Freddie have long bought and sold mortgage-backed securities to maintain market liquidity for their bonds and tamp down spreads between MBS and Treasuries. After the government took over the companies in 2008, regulators put strict limits on how much MBS they could buy.TD Cowen head of U.S. rates strategy Gennadiy Goldberg said that before Trump’s announcement he expected 30-year mortgage rates to drop to 5.25% by the end of the year. If executed rapidly, the latest purchases could bring 30-year mortgage rates down to about 5%, Goldberg wrote.
What’s Next: Pulte told Barron’s the purchases wouldn’t hurt the government’s plan to sell some of its Fannie and Freddie stakes. The new investments will increase their earnings, he added. Pulte said Trump had a list of between 30 and 50 other housing ideas and would soon announce what will move forward.
—Ben Levisohn and Joe Light
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Miners Glencore and Rio Tinto in Mega-Merger Talks
Two of the world’s biggest mining companies have restarted mega-merger talks. Switzerland’s Glencore and the U.K.’s Rio Tinto said Thursday they are in early talks about a combination of some or all of their business, confirming an earlier report.
Glencore produces metal, mineral, energy, and agricultural commodities, while Rio Tinto mines and processes iron ore, aluminum, copper, and minerals. Rio Tinto is the bigger of the two, with a market value of around $140 billion, while Glencore’s market value is around $65 billion.The companies said in separate statements on Thursday that one consideration would be for Rio Tinto to buy Glencore in a “court-sanctioned arrangement." The announcement comes more than a year after the two companies first discussed a potential tie-up, in talks that eventually broke down.Rio has been burned by dealmaking mistakes in the past but the transaction could boost production at a faster rate than building new mines. “The mining sector cannot give up on the mantra that bigger is better," said AJ Bell’s head of markets Dan Coatsworth.
What’s Next: The companies cautioned that there isn’t any certainty about whether a deal will come together and said they would announce more “as appropriate." Rio Tinto has until Feb. 5, to “either announce a firm intention to make an offer for Glencore" or announce that it doesn’t intend to make an offer, the companies said.
—Janet H. Cho and George Glover
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General Motors Takes Another Big EV Charge. It Isn’t Finished.
In another blow to the American electric-vehicle business, General Motors is basically writing down the EV assets it already has on its books, trying to shrink EV capacity as demand for them slows and sales weaken after the end of tax incentives for buying them and relaxed emissions standards.
GM is taking $6 billion in charges related to EV assets and programs, including $1.8 billion in noncash charges. This is after a $1.6 billion charge in the third quarter related to its EV pullback, and more is coming. GM expects additional material cash and noncash charges this year.The auto maker cited commercial negotiations with its supply base, which it believes would be significantly less than the EV-related charges incurred in 2025. Rival Ford Motor announced $19.5 billion in similar charges in December.GM is classifying the charges as special items, so it won’t affect its financial guidance or how its reported results match up with analyst estimates. GM expects to earn between $12 billion and $13 billion in 2025, which implies a fourth-quarter operating profit of about $2.6 billion, just below expectations.Along with EV charges, GM will record a $1.1 billion charge primarily related to the announced restructuring of its Chinese business.
What’s Next: About 10% of all new U.S. car sales before the end of September were all-electric vehicles. Americans bought 1 million EVs in the first three quarters of 2025, up 12% from the prior year, but 2026 EV sales could fall to 5% of U.S. sales, according to Ford.
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U.S. Worker Productivity Surged, But Not Because of AI
Total nonfarm worker productivity surged 4.9% in the third-quarter of 2025, the fastest pace since the third quarter of 2023, but not because of artificial intelligence. The increase is largely due to the math behind how the economic indicator is calculated, rather than a boom in worker efficiency.
Labor productivity measures how quickly and efficiently workers generate goods and services. The Bureau of Labor Statistics calculates labor productivity as total gross domestic product growth divided by the number of hours worked. Real GDP increased at a 4.3% annualized rate in the quarter.Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said that while some will interpret the increase as a sign that AI is starting to drive faster GDP growth, the reality is that “productivity growth is often noisy from quarter-to-quarter" and subject to significant revisions.Year-over-year productivity growth is a more muted 1.9%. Productivity gains in 2025 represent a “slight acceleration, but not a radical departure" from recent business cycle trends, said Stephen Stanley, chief U.S. economist for Santander. Productivity gains were driven by investment, changing labor-market dynamics, and business dynamism.Companies are now faced with a structurally tight labor market where the supply and access to labor has greatly diminished, globalization is being rolled back, and incentives are being put in place to reshore production to the U.S., writes Richard de Chazal, William Blair’s macro analyst.
What’s Next: While output increased 5.4% during the quarter, and hours worked increased 0.5%, worker pay fell. Unit labor costs in the nonfarm business sector decreased 1.9% in the quarter, while inflation-adjusted hourly compensation decreased 0.2%, adding to American households’ affordability challenges.
—Megan Leonhardt and Janet H. Cho
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Mamdani Loses Battle to Delay Auction of Rent-Controlled Apartments
A U.S. Bankruptcy Court denied New York City Mayor Zohran Mamdani’s request to postpone the auction of about 5,500 rent-regulated apartments owned by bankrupt landlord Pinnacle Group, dealing a setback to his new administration’s efforts to tackle housing affordability. City officials are considering their options.
Shares of Flagstar Bank, the lender, rose as much as 6% after the decision, which cleared the way for Thursday’s auction to go ahead. Pinnacle filed for bankruptcy last year after Flagstar moved to foreclose on its $563 million portfolio of rent-regulated dwellings.Deutsche Bank research analyst Bernard von Gizycki wrote that although there might be some additional write-downs needed based on the current offer, Flagstar management “has already taken marks and reserves against the loan." He said if loan issues get resolved, it would be “credit positive" for Flagstar.Mamdani got elected on a promise to champion affordability, including housing and rent. The city sought a 30-day pause on the auction to evaluate Summit Properties USA’s offer of up to $451 million for the properties, saying Summit might not have enough resources to rehabilitate the dwellings or maintain them.Rebel Cole, a chaired professor of finance at Florida Atlantic University, told Barron’s that landlords are limited in how much they can raise rent even if their property taxes and other costs increase, and many are losing money renting their properties.
What’s Next: Flagstar has said it expects the debt related to the portfolio to be resolved during the first half of 2026. NYC’s deputy mayor for housing Leila Bozorg said the city would continue its fight to ensure the owner of this portfolio makes necessary repairs and respects the rent stabilization regulations.
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner
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