If the Draghi sell-off was an unmitigated disaster yesterday, it's only a plain old disaster today.  In fact, even 'disaster' may be too strong a word for something that merely leaves us at 3 week lows in MBS prices.  In general, the average lender is back in line with rate sheets from November 13th.  Anyone who was following along on MBS Live yesterday afternoon can tell you that doesn't sound too bad compared to where it felt like we might be headed at times.

NFP came out today, but apart from the first few minutes of the reaction, you'd barely know it.  This isn't too much of a surprise considering it would have taken a truly horrible report to get market participants to give it even the slightest weigh in the Fed's rate hike decision for December.  If it had been significantly stronger, I'm not sure what we would have seen (it was slightly stronger, by the way, but that didn't seem to matter). 

As it stands, traders looked exhausted by the week--and especially by yesterday.  By the time Europe was done for the day, US markets just flat-lined in a manner that was uncommonly low in volume and volatility--even for a Friday afternoon.  Given that the flatness occurred near the best levels of the day, it doesn't really bother me if it doesn't bother you.  Rather, I'm inclined to see it for what it likely is: exhaustion.  Once it became clear that the prevailing trade was an unwinding of yesterday's panic trades, and that it would supersede any NFP reaction, there wasn't any more reason for conviction.