Fannie, Freddie Ramp Up Large MBS Bids in Push to Lower Mortgage Rates

Fannie Mae and Freddie Mac have started placing large orders to buy mortgage-backed securities, entering a market turbulent by widening bond spreads amid a spike in volatility.

Fannie Mae and Freddie Mac Surge 40% on Trump Remarks, Still Far from Pre-Crisis Peaks

The government-controlled companies are expanding their already substantial portfolios of bonds and loans to take advantage of a sharp selloff.

President Donald Trump gave instructions two months ago to buy $200 billion in MBS  to increase housing affordability. The recent spike in spreads that caused mortgage rates to rise to a three-month high may be mitigated by the increased buying.

However, it might only partially counteract broader market pressures from the US-Iran conflict, which has raised borrowing costs and resulted in a noticeable increase in Treasury yields on Friday.

Through their so-called retained portfolios—the bonds and loans they hold onto rather than selling to investors—Fannie and Freddie, which buy and package home loans into securities and financially guarantee them to buyers, are among the biggest holders of US mortgage debt. Before being placed under federal conservatorship in 2008, the two had a combined value of $1.5 trillion; by late 2022, that amount had fallen to just $158 billion.

The portfolios have been increasing since the middle of last year, reaching $278 billion as of January. The roughly $9 trillion MBS market moved almost immediately after Trump ordered Fannie and Freddie to increase bond and loan purchases. The relative yields to Treasuries on recently issued securities narrowed by roughly 0.2 percentage points.

 

British Airways Suspends Dubai Flights Until End of May Due to Regional Instability

British Airways anticipates months of disruption in the Gulf, as evidenced by the cancellation of all flights into Dubai until at least June. The airline announced on Monday that it would not operate flights to Doha, Qatar, until the end of April and to Dubai, Amman, Bahrain, or Tel Aviv until after May 31. There won’t be any flights to Abu Dhabi until later this year. As the conflict enters its third week, this is the longest major airline cancellation announced thus far.

Lufthansa and Air France, two European competitors, have announced cancellations this month. Travel agencies have also begun to cancel vacation packages that pass through the United Arab Emirates, citing the insurance risk of passengers becoming stranded through its airports.

BA’s decision was made just hours after a drone attack that started a fire at a nearby fuel tank early on Monday, forcing Dubai’s main airport to close for seven hours. Flights operated by Emirates had to be rerouted.

Virgin Atlantic cancelled its revived service, and none of the major European airlines have resumed flights to Dubai. BA announced that it had extended the period “due to the continuing uncertainty of the situation in the Middle East and airspace instability.”

Previously, BA had canceled its services until later this month. It will keep flying to Saudi Arabia’s Jeddah and Riyadh, less impacted by the airspace restrictions

. Flights at Dubai’s main airport, which was the busiest international airport before the war, were suspended starting at around six in the morning local time.

Later in the day, Dubai International gradually started operating flights to a few destinations. Authorities said the fire had been contained earlier in the day, but no injuries were reported.

Although the frequency of Iranian drone attacks has decreased recently, they have nevertheless targeted strategically significant locations like Dubai’s ports, airports, and buildings.

British Airways Halts Dubai Flights Until Summer Over Airspace Instability

British Airways anticipates months of disruption in the Gulf, as evidenced by the cancellation of all flights into Dubai until at least June. The airline announced on Monday that it would not operate flights to Doha, Qatar, until the end of April and to Dubai, Amman, Bahrain, or Tel Aviv until after May 31. There won’t be any flights to Abu Dhabi until later this year. As the conflict enters its third week, this is the longest major airline cancellation announced thus far.

Lufthansa and Air France, two European competitors, have announced cancellations this month. Travel agencies have also begun to cancel vacation packages that pass through the United Arab Emirates, citing the insurance risk of passengers becoming stranded through its airports.

BA’s decision was made just hours after a drone attack that started a fire at a nearby fuel tank early on Monday, forcing Dubai’s main airport to close for seven hours. Flights operated by Emirates had to be rerouted.

Virgin Atlantic cancelled its revived service, and none of the major European airlines have resumed flights to Dubai. BA announced that it had extended the period “due to the continuing uncertainty of the situation in the Middle East and airspace instability.”

Previously, BA had canceled its services until later this month. It will keep flying to Saudi Arabia’s Jeddah and Riyadh, less impacted by the airspace restrictions

. Flights at Dubai’s main airport, which was the busiest international airport before the war, were suspended starting at around six in the morning local time.

Later in the day, Dubai International gradually started operating flights to a few destinations. Authorities said the fire had been contained earlier in the day, but no injuries were reported.

Although the frequency of Iranian drone attacks has decreased recently, they have nevertheless targeted strategically significant locations like Dubai’s ports, airports, and buildings.

Kalshi Raises $1 Billion, Doubles Valuation to $22 Billion

Kalshi raised more than $1 billion in a new financing round at a valuation of $22 billion. Kalshi’s valuation from its most recent funding round in December, when it was valued at $11 billion, will nearly double by the deal.

The fundraising campaign demonstrates that investors are still keen to learn more about the rapidly expanding prediction market sector despite recent criticism from lawmakers who have voiced concerns about the platforms’ susceptibility to insider trading and manipulation.

The source, who wished to remain anonymous due to the confidentiality of the information, stated that Coatue Management spearheaded the new funding round. With support from Sequoia Capital, Andreessen Horowitz, and ARK Invest, Paradigm led the prior financing.

Financial contracts linked to a variety of real-world events are available from Kalshi. It was established in 2018, but after a court permitted it to offer trading on the results of the 2024 election, its popularity skyrocketed.

The company can operate nationwide under federal regulations because it is governed as a financial exchange and overseen by the Commodity Futures Trading Commission, in contrast to traditional gambling companies, which are subject to state regulations.

Sports betting has taken over the exchange’s operations since Kalshi began accepting wagers on athletic events early last year. Numerous gambling companies have hurried to create their own products for the prediction market.

Dune Analytics user-compiled data shows that trading volume on Kalshi surpassed $10 billion in February, which is twelve times more than it was just six months earlier. Polymarket, Kalshi’s biggest rival, has grown at a similar pace despite primarily doing business overseas.

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