UMBS were in the green early.  6.0 coupon is up 11 bps.  5.5 is up 22 bps.

US equity futures were steady, with an all-time high this year firmly in sight amid optimism that the Federal

Reserve is getting close to cutting interest rates.   The S&P benchmark is heading for a seven-week winning streak and closed on Tuesday within 0.5% of the record high reached early last year.

Bets that the Fed could start cutting rates as soon as March have pushed US stocks to levels that some technical

analysts consider overbought.

Housing affordability probably bottomed this year, according to data from Redfin. Only 16% of listings were affordable for the typical household, down from 40% pre-pandemic.

On many of the recent days with a similar amount of movement in the bond market, there was a logical correlation between the underlying data/events/news and the market movement.  For instance, friendly data or friendly Fed comments pushed rates lower in a way that generally made sense.  Today is quite different.

We have an 11bp rally in 10yr yields to the lowest levels in months, and no obvious catalyst.  One could argue that bonds are simply following the medium term trend, but that’s a lousy justification.  Best bet: keep the late December thesis in focus.  Specifically, we should always expect to see random volatility with bigger-than-normal movement in the 2nd half of December.  The real surprise is that we had to wait this long to see it.