MBS MID-DAY: Heading Out At Best Levels; This Might be a Recap

In the same vein as December 26th, this Mid-Day report might end up standing as the Recap due to the stability of the day's range and the mere 90 minutes left before the early close.

Bond markets were steady-to-slightly-stronger overnight and market participation remains understandably low.  In fact, it's in the running for the slowest day of the year.  All that means is that any big moves could cause more momentum than they otherwise might.  In that regard, all we'd really care about would be a big, unexpected snowball sell-off, but at this point it looks like December 23rd already took care of that eventuality.

There's not nearly as much potential for a big snowball rally from current levels.  At best, 10yr yields could hope to see 2.15 by the end of the day but they're slightly more likely to hold inside the 2 day range (which has a low of 2.165).  Fannie 3.5s and 3.0s are also right in line with their best recent levels and have similarly been holding a narrow range for the past 2 days.

There were several economic reports today and none of them had any effect on anything.  This was to be expected, and if anyone tells you otherwise, laugh at them and wish them a Happy New Year.  On a brutally serious note, Happy New Year!