With only a few economic reports today, markets opened the fairly mild. Consumer Confidence missed the mark, but New Home Sales rose to a new 2 year high. Stocks held subtle gains until Harry Reid came out saying a deal is not likely to happen before the deadline, given the short amount of time left. Stocks dropped 100 points on the Dow and mortgage bonds moved higher. It’s difficult to say that an agreement would be good because anything put together before January 1st would certainly be rushed through. That happening increases the chances of Washington pulling a fast one on the public. This would not be the first time something like that has happened… On the other hand, any additional pressure on the fragile state of the economy could produce some dire consequences. We will continue with a cautious floating stance, but be aware that any type of “Fiscal Cliff agreement” will put pressure on mortgage bonds and push rates higher.