“Big” is a relative term these days, to be sure. In fact, 4.8bps in 10yr yields and 10/32nds in Fannie 3.5 MBS prices isn’t too terribly big, but it was nonetheless one of the 2 best days since the election, so we’ll take what we can get. Stocks certainly had a much bigger day, launching easily to new all-time highs for most indices.
Before you start celebrating just yet, keep in mind that today’s strength has most to do with the fact that traders were exiting short positions set in advance of the ECB announcement. It’s no mystery that cash moves to the sidelines ahead of these sorts of events, and neither is it a mystery that cash has been voting in favor of higher rates recently. Ergo, a move to the sidelines helps rates fall a bit.
From here, we should assume rates are ready to head either way tomorrow depending on the details of the ECB announcement.