Today will either go down as a game-changing rally in the course of bond traders' decision making process for 2017, or as an epic head-fake that provided LO's a great opportunity to lock a few top tier deals at sub 4% 30yr fixed rates.  Either way, we rallied in a major way.

The move began as early as yesterday afternoon, albeit after market hours.  The leading edge of the drama was apparently a New York Times article suggesting former FBI Director Comey had evidence that Trump asked him to back off on the investigation into former National Security Advisor Flynn's communications with Russia.  The conclusion by the NYT and others was that such evidence could be demanded by a congressional oversight committee and ultimately result in Trump's impeachment.  

As soon as tweets and newswires began coming out from actual members of congress with the "I" word, markets began reacting.  The increased liquidity following the morning opening bells (820am CME and 930am NYSE) facilitated a massive acceleration of the overnight trade.  In other words, the bulk of American investors were done for the day by the time this news started hitting overseas markets, and they wasted no time getting caught up as soon as they began their trading day today.

The net effect was a 10+bp rally in 10yr yields (2.22% at the close) and a half point gain in Fannie 3.5s (103-06).  The attached video (available to MBS Live members) has a lot more info as well as lock/float strategy considerations.