Good Morning on this fantastic and last Wednesday of the year,

Light and lighter trading volume is in the markets and can sometimes create stupid moves. Bonds are off a bit right now with the 10-yr back to 1.55% and mortgage bonds off 20bps.  The reason is that the pros are at home and the amateurs are trading. They are emotional and reactionary. What is worse is that the light trading volume cannot mask a stupid trade. A stupid trade, if big enough, can in fact move the market and then spook other stupid traders. I believe this is what has happened and it all began with a surprising jump in oil prices. Oil jumped and then some genius trader (not), looked back and decided that bond prices and oil prices corelate, so he had better liquidate some bonds. UGH. I do not suspect this move against us to last. The bigger concern will be how Omicron impacts the economy. If the data shows the strain is not as problematic as thought, bonds will feel pain. It’s still too early to tell. Patience is a virtue here.

Please remain safe and healthy, Happy Holidays, make today great.