At the close of business yesterday, the bond market outlook was decidedly negative.  We're not talking about a colossal shift in sentiment, mind you, but rather a tipping of the scales back in a more cautious direction.  After all, we'd just seen 3 straight weeks of modest improvements (even flat rates would have been a victory), and suddenly found ourselves well on our way to higher yields in the current week.

Then Cohn resigned.

Gary Cohn was Trump's chief economic advisor.  He was seen as a smart, pragmatic voice of reason within the administration.  More importantly, he was seen as "market-friendly."  Although he was widely expected to depart at some point not too long after the tax bill passed, markets hoped it would later rather than sooner.  Logically, the departure of a pragmatic, market-friendly figure had immediate effects for markets!

Stocks dropped sharply in the overnight session and bonds rallied to what would have been the lowest levels of the day (10yr yield from 2.89% to 2.85% in the opening trades of the after-hours session).  While there are no guarantees, the typical pattern we see after these sorts of events is a knee-jerk that ends up being much bigger than the eventual reaction.  Indeed, we're already seeing some push back as the stock market opens.  

The opportunity exists because the overnight trading acted to keep our recently positive trend alive.  It made things look more optimistic for the recently positive trend.  It could also result in a few rate sheets being pretty decent this morning.  If history repeats itself, that would make this a good morning to take a hard, strategic look at locking vs floating for more risk averse clients.