Cautiously Floating Bias

Stock investors are jittery, as is evident by a 100 point drop in the Dow after lower than expected ADP Employment figures.  Estimates were set for 157,000, but the number came in at 135,000.  Usually this would fall on the side of QE3 full steam ahead and a rally in stocks.  But, all the recent chatter regarding tapering off of QE3 is outweighing all the data.  Tomorrow’s Initial Jobless Claims and Friday’s monthly Jobs Report is sure to bring volatility to all the markets.  mortgage bonds are responding accordingly with a decent move higher after the news.  Rates quickly moved off of their lows and have been trying to find a leveling point. The last 5 days of bond pricing is attempting to establish that level.  As long as we stay above the current support level, we will maintain a cautious floating bias today.