Portland Mortgage Market Update — January 23, 2026

While everyone focused on Greenland, the Yen-Carry Trade did real damage on Tuesday. The beginning of the week was BRUTAL to the market and rates. While the public was wringing their hands over what President Trump had posted about his plans to take over Greenland the night before, the market was in a panic about what was going on in Japan. Japan has been critical for the global markets for the past couple of decades because of what is called the Yen-Carry Trade. In short, Japan has been issuing treasuries at uber-low interest rates (think near 0%) allowing investors to borrow Yen and invest them in higher yielding assets (like US treasuries, currently around 4.2%). Investor make the guaranteed 4% profit, keep the change and do it all over again. However, a regime change has taken place in Japan with a new Prime Minister coming in and cleaning house on Japan's Parliament, with a focus on ending "launching an entirely new set of economic and fiscal policies". How are they going to spend so much? By issuing more debt, which would spike interest rates on the Yen, making the Yen-Carry Trade less palatable and in effect shutting down the ATM that the entire world had been using the past 20+ years on speculative investments. Over a trillion dollars was wiped out from the stock market and mortgage rates rose by around .375%-.5% overnight.

Wednesday was all about damage control. World Leaders spoke at Davos with much of the EU and Canada condemning President Trump and his Greenland antics, while US Treasury Secretary Scott Bessent tried to stem the bleeding saying he had spoken to Japanese officials and that he was "sure that they will begin saying the things that will calm the market down". Denmark had made a very public statement by selling all their US treasuries in defiance of Trump's moves towards Greenland, which Bessent summarily dismissed saying "Denmark's investment in US Treasury Bonds, like Denmark itself, is irrelevant". President Trump also spoke assuaging fears that he would invade Greenland militarily, and the following day announced that a deal had been made seemingly putting the whole Greenland debacle to bed. The market rallied on Thursday as a result but didn't quite undo the mortgage rate losses

Next week brings a Fed meeting! There is almost a 0% chance we get a rate cut as a result, but there is chatter of Trump announcing the next Fed Chair next week and it would make sense that he does so right before the meeting adjourns to kneecap whatever current Fed Chair Powell says in his post-meeting remarks. For most of the past year the heir apparent has been Kevin Hassett, who currently acts as director of the National Economic Council and frequently appears on TV to defend the administrations fiscal policies. However a new contender has entered the chat- Blackrock chief investment officer Rick Rieder. Rieder oversees about $2.4 TRILLION in bonds and has no Fed experience which the administration considers a positive. Trump mentioned this week that he was "very impressive" in his interview and also commented that he would hate to lose Kevin Hassett if he got the job, hence the rise of the dark horse Rieder. Both call for lower interest rates, with Rieder claiming gains in AI will be disinflationary and labor is the bigger concern right now. Either way, looks like we will be getting a more dovish Fed leader when Powell's term ends in May.