Heeeeeeeading into 5 pm "going out" marks.....there is not much I can tell you to stem the frustration of being in the float boat. That of course assumes you are out to sea (without a sail). For those of you who have locked up and are pending a CTC....I hope our commentary is colorful enough to draw your attention from last minute holiday preparations (or clean up if you've had eight crazy nights already).

Sorry, got a little distracted there...like I was saying: Yawn.

The 0.75% coupon bearing 2 yr TSY note is -0-02 at 99-22 yielding 0.905%. The 3.375% coupon bearing 10 yr TSY note is -0-17 at 96-30 yielding 3.746%. The yield spread between the 2yr TSY note and 10yr TSY note...which is slightly firmer than the 286bp record that was set earlier today).

Here are 10s...see what I mean by mostly sideways this afternoon?

In the mortgage market, while MBS have been off  limits to most buyers this week, the Fed decided to put on their serious buyer face and do a little more heavy lifting today. That helped tighten yield spreads a few basis points, but it didn't do much for price directionality though...RED is RED and LESS REBATE is LESS REBATE no matter how look at it.

Rate sheet influential MBS coupons are putting along just above intraday low prints. The FN 4.0 is -0-18 at 97-00 yielding 4.285% and the FN 4.5 is -0-14 at 100-04 yielding 4.496%. The secondary market current coupon is 4.492%.

See what I mean by RED is RED in the MBS market?

The rates market has been heading sideways all afternoon...again in slow trading flows. Only 530,000 10s have traded today...that is a VERY quiet market. With only one more full day of trading this week...you have to wonder if the ILLIQUID marketplace might be a source of recovery in the next 24 hours. Meaning position squaring is expected to occur before the market completely turns off on Thursday afternoon.  This go round, position squaring just happens to be in favor of a correction in rates.

WHY?

Because most fast money accounts are SHORT "rate sheet influential" benchmarks. When SHORT positions are closed....they are covered via buying at current market, which implies, if any real money accounts are looking to time a "yield grab", the time is near. Position squaring in stocks should also support a bid to TSY as equities are due a round of profit taking.

That said, a modest recovery rally is possible in rates over the next 24 hours. But again, I must remind that I am purely posing possible interest rate strategies as one large block trade would be enough to cancel out any forward progress.  CHOPATILITY still defines trading flows at this time of year.