Cautious Float

There are no economic reports on the calendar today, but plenty of companies will be reporting their earnings.  The big event for investors will be Apple, which reports after the closing bell.  Overall, a majority of earnings have beat expectations.  But many investors cite the lower targets, and are scrutinizing revenues as an indicator to the pace at which the economy is hopefully improving.  Without an overall surprise in earnings, stocks may be likely to take a break for a while.  Especially, given the double digit gains seen in the first half of the year.  mortgage bonds are still riding along the underside rail of the downward trend line.  The last 2 weeks have had plenty of reasons to push bond prices lower, but they have managed to hold onto gains.  Whether it’s all the Fed, or a few more private investors that are seeing value in bonds, interest rates are off of their 2 year highs for now.  Should bonds break through this resistance, interest rates will ratchet down a notch.  We will maintain a cautious floating bias, knowing that auction results are due out at 1 pm ET today which could be harmful to interest rates.