Next week, the bond market will only be open for 3.5 days.  In that time, the bond market will see a majority of its 'year-end' trades (asset allocation changes from money managers who are required to match their portfolios to the indices in their managed funds).  Some of that trading will occur in the 3.5 trading days of the following trading week (half day on New Year's Eve and full closure for New Year's Day), but traders know that will be a more difficult environment in terms of liquidity.  Some of it has already occurred, but it won't be until we have clarity on the stimulus/spending bill that traders can really know exactly how year-end positions might need to be adjusted.

In the meantime, we're left with a few truths as far as the bond market is concerned.

• 0.96% is a well-established technical ceiling/support zone for 10yr yields. 
• Swift passage of a stimulus package of $900bln or more would likely challenge that ceiling
• But the result of that challenge tells us relatively little compared to the momentum that takes root at the start of 2021
• Even then, that momentum is completely subject to change based on GA senate run-off elections
• Before we see what's what with stimulus, it makes good sense for yields to be consolidating in a narrow year-end range
• No matter what Treasuries are doing, MBS will be doing a smaller version of it and mortgage rates will be another step removed from MBS.

Bottom line: the baseline is for low drama.  Stimulus would increase volatility, but it wouldn't set the tone in an important way compared to new year trading--especially after GA elections.