It's been an 'up and down' trading session, but the 'ups' have been the clear winners and that looks increasingly solidified as trading winds down for the day.  10yr yields hit the official 3pm close at 2.12--a solid 5bps below Wednesday's latest levels.  Fannie 3.0s were 101-16 at the same time and are now back to 101-18--a solid 10 tick gain on the day.

Shortly before that, bond markets had been trending gradually weaker since 11am.  We may have briefly been on the edge of limited reprice risk, but markets bounced before crossing the risk threshold at 101-14 (in Fannie 3.0s).

In terms of holiday volume levels compared to normal trading conditions, today was somewhere in between.  Certainly, it was far more active than any other day during these holiday weeks, but it wasn't any busier than December 19th (which we previously discussed as being the first day of the winter break).  Incidentally, this morning's trading levels were right in line with December 19th's trading range before the rally began.  The rally was a combination of tradeflows (big block trade at 8:40am kicked things off) and weaker Manufacturing data.