Energizer Bunny Rally Finally Out of Juice?

Look at any 2-day chart on the dashboard or mobile app, OR simply notice the acceleration in bond market gains after 3pm.  This timing provides clues because the CME floor closes at 3pm.  That means that a lot of options trading is no longer taking place, thus forcing investors to look elsewhere in order to offload risk ahead of next week's expected volatility. 

One way they can offload risk is to close their open positions.  The just-released weekly CFTC report shows that those positions were overwhelmingly "short" this week.  As such, closing them means buying bonds.  Seeking safety after getting out of riskier corners of the market means buying bonds.  Seeing technical targets broken means buying bonds.

After a while--and especially amid these sorts of 'feeding frenzy' conditions--everyone's appetite for fixed-income is sated.  We may be witnessing that magical point of satiety here after the impressive extension of an already impressive rally after 3pm.  If you have the reprice you're looking for, and if 10yr yields cross back above 2.142, that's very likely "it" for today.

MBS / Treasury Market Data

FNMA 3.0
FNMA 3.5
2 YR
10 YR
Pricing as of: 12/9 10:12PM EST
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