Jobs Report, Fed Policy, Trump Mortgage Bonds
Federal Reserve Rate Cut Expectations Dim After Jobs Report
Bond traders significantly reduced their expectations for a Federal Reserve interest rate cut in January following a stronger-than-anticipated December jobs report. The unemployment rate fell to 3.7% in December, according to the Bureau of labor Statistics’ Employment Situation Summary released January 5, 2026. This figure contrasted with predictions of 3.8% from economists surveyed by Dow Jones.
Lindsay Rosner,head of multi-sector fixed income investing at Goldman Sachs Asset Management,and Blake Gwinn,head of US rates strategy at RBC Capital Markets,discussed the implications of the report on BloombergS “Real Yield” program with Scarlet Fu. Their conversation centered on the jobs report, potential Federal Reserve monetary policy shifts, and a recent declaration regarding mortgage bonds from former President Donald Trump.
The CME FedWatch tool, which tracks market expectations for Fed policy, showed a dramatic shift after the report’s release. As of January 9, 2026, the probability of a rate cut at the January 30-31 federal Open Market Committee meeting fell to 6.3%, according to CME Group data. prior to the report, the probability was approximately 82.1%.
Former President Trump announced on January 8, 2026, that he intends to pursue legal action against mortgage bond insurers, alleging fraud related to the 2008 financial crisis. Reuters reported that Trump stated he believes insurers profited unfairly during the crisis.