How a corner of the Trump trade could unleash higher mortgage rates

Kevin Lamarque/Reuters

• Rising odds of Fannie Mae and Freddie Mac being re-privatized have sent shares of the firms soaring.
• But a move to release them from government control could damage the mortgage market, Pimco warned.

An under-the-radar Trump trade has soared this year on bets of a big shake-up in the mortgage industry — but it's a change that might not ultimately benefit everyday Americans.

That's according to Pimco, which said this week that the privatization of Fannie Mae and Freddie Mac...