MBS Live Recap: Bonds Back to Mid-Range Ahead of Risky Calendar

With essentially nothing on the calendar today, and quite a lot on the calendar over the next 2 days, it's not too surprising to see bonds continue their recent shift back to the middle of the Jan-Feb range.  In fact, rates are more-or-less in the middle of the entire post-election consolidation pattern.

Today was largely an extension of the weekend for bond markets.  Volume was the lowest it's been since the winter holidays and there were no major reactions to any headline or event.  Stock gains set the tone and bonds perhaps took some reluctant notice.  In other words, if this were an active "risk-on" day for bond markets, we would likely have seen more weakness.  Instead, we got token weakness, and even then, only through European trading hours.  

Fannie 3.5s outperformed Treasuries, losing only 5/32nds by the end of the day.  10yr yields were 2.7bps higher (8/32nds lower in price) to 2.436%.  Stocks continued their winning streak with the S&P adding more than 10 points to close at another all-time high (3rd day in a row).