Bonds had a rotten day, primarily because stocks had an amazing day (although the terrible 5yr Treasury auction didn't help).  In turn, stocks primarily had an amazing day because they had a rotten day on Monday.  Looked at another way, in week-over-week terms, the S&P is roughly 2% higher right now--something that has happened to 1 in 4 weeks in 2018.

Caveats aside, and holiday trading realities notwithstanding, there are a few reasons to be cautious about this particular move.  First off, in outright terms (not percentages), today's stock gains were the best ever (Dow, S&P).  Volume was nearly as high as last Wednesday's Fed day.  That suggests some investors may be lurking and waiting to get back on-board with stocks as soon as they sense the Q4-2018 dip is over.

Beyond that, bonds have had their best 2 months in more than 2 years.  It's highly uncommon for 2 such months to be followed by gains in the 3rd month.  I think change to "new year trading" only makes that a bigger risk.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 4.0
101-13 : -0-07
10 YR
2.8080 : +0.0550
Pricing as of 12/26/18 4:46PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:12PM  :  ALERT ISSUED: Negative Reprices Becoming More Likely
1:13PM  :  ALERT ISSUED: Negative Reprice Risk Increasing After 5yr Auction
12:43PM  :  ALERT ISSUED: Bonds at Weakest Levels Following Stock Gains

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Dec 26
9:00 CaseShiller 20 yy (% ) Oct +5.0 4.9 5.1
13:00 5-Yr Note Auction (bl)* 41
Thursday, Dec 27
8:30 Jobless Claims (k) w/e 217 214
9:00 Monthly Home Price mm (%) Oct 0.2
10:00 New home sales-units mm (ml)* Nov 0.560 0.544
10:00 New home sales chg mm (%)* Nov 2.9 -8.9
10:00 Consumer confidence * Dec 133.7 135.7
13:00 7-Yr Note Auction (bl)* 32