MBS Live Recap: Slowest Day of The Year for Bonds

How's that for an exciting headline?  At least it's an "extreme," technically--just not the sort of extreme that would pique our interest (but still better than the extremes that would peak our interest rates)!  Seriously though, trading volumes were easily the lowest since the December 2016 holiday season.  

Talk turned to political headline risk with Kushner testifying in a closed Senate session today and Manafort/Trump Jr. set for more closed-door questioning in the coming days.  The fading of the last-2016 "Trump trade" has been one of the supportive themes helping bond markets push back toward lower rates.  To whatever extent this week's political headlines cast more doubt on the administration's efficacy (or conversely, if they put those fears to rest), bonds could find some motivation for better or worse.  Senate debate of the healthcare bill and government shutdown headlines round out the political risk.

As for today's movement, I'd hesitate to read too much into anything that occurs in volume this light, but if we had to pick a theme, we could point out the resistance bounce in 10yr yields at Friday's lows (just over 2.22%).  Ideally, we'd want to see that broken before Wednesday afternoon if we hope to see the current trend toward lower rates remain intact.