Cautiously floating

Both stocks and bonds are higher today, with the bond market bouncing off the 200 day moving average as hoped for.  Several Fed members have been speaking lately, reiterating the Fed’s stance of maintaining stimulus until targets are met.  However, “tapering” quantitative easing is still on the table.  This just means that the dose of support may drift lower.

While we hug the 200 DMA we will continue to float.  However, with the significant amount of data being released this week we will likely see a break higher or lower, depending on the data.  We feel there is a good chance the news will be bond friendly, so we are hoping for a continuation of improved rates.  However, watch closely.  Should the news be harmful for rates, we will quickly change to a locking bias.