Spirited bond trading this morning as early selling met Washington wavering on the status of tariff reductions in Phase 1. The day’s net was rates largely unchanged except for a small steepener to reduce the odd bear flattening that rampaged all day Thursday. A long weekend to observe Veterans Day returns traders in time to face CPI and Chair Powell testimony on Wednesday. Equities are heading out mixed after gains of more than 6% in the last month. The rest of this year will require constant vigilance to measure the optimism in equities and risk assets against the likely impact of improved trade. We start the benchmarking this week with analysis that shows how long bonds held back from the trade theme until they decided to catch up in a matter of hours. There is now room for yields to retreat a bit, but technicals don’t show much upside potential to a rally. That leaves yields cheap until US/China leaders move faster toward execution and implementation. The second article looks at improved debt support for FNMA and FMCC as they build equity buffers in front of 2008’s Treasury backstop.