FTN Financial's Jim Vogel said..............>

US VIEW: FTN Financial's Jim Vogel said "congressional action last night

included provisions that allow the President to sign the new tax bill in 2017

without triggering mandatory spending cuts in social programs. This could be

important to the bond market in the closing days of December."

- He adds "many financial institutions may add to their GAAP losses from the

writedown of deferred tax assets, after the bill is signed, by taking additional

losses in their investments. Those investment proceeds would move out the curve

to increase earnings. Combining multiple sources of losses into this quarter was

an active strategy coming into this week, but slowed when the signing date was

thrown into question on Tuesday."

- Vogel adds too that the "tax/earnings strategy is even more attractive given

the curve steepening in 2s/7s. Traders are prepping for bid lists this morning."

But "the action will not be directly in Treasuries," he said. But "other things

equal, one net impact should be flattening pressure on the yield and spread

curves," he said.