Kind of a sleepy day, not much going on that moved stocks or the interest rate markets today. There were no significant economic releases today, a story that has lasted from a week ago continued today. That will not occur again this week. Tomorrow March retail sales, March PPI, and February business inventories. Retail sales have not been impressive since last November. Another weak sales report tomorrow would drive interest rates lower and possibly help stocks as traders re-assess for the umpteenth time when the Fed will increase rates. As for the PPI, back in the day it was a market mover - recently with inflation well below the Fed's 2.0% target the inflation gauges have had little initial market impact.

Not normally a report that moves markets directly - tomorrow the NFIB small business optimism index will be released at 8:00 am. The index is expected about the same from last month. Not much of an improvement if the index is on target and suggests that small business is improving at a very slow rate. The strongest component in February was job openings hard to fill. The gain here points to lack of slack in the jobs market, at least for skilled workers. The second strongest component, plans to increase capital outlays, showed no change but the level does point to business confidence and the need to hire in future months. This is the beginning of Q1 earnings season. Markets expecting earnings a little weaker earnings.

The best I can say now for the bond market, technicals are not bearish yet but equally not bullish anymore. The 10yr has one last support at 2.02% (1.94% now) before the bearish outlook has strong legs. The rate opened this morning at 1.97% in very early trading but is ending the session at 1.94% down 1BPS in very thin trading. Tomorrow and the remainder of the week will provide information to either hold here or send rates toward 2.25%. MBS markets of course, will follow along. After all these years I still am amazed how mortgage web sites refuse to admit MBSs are followers, not leaders. Just maybe, from what I am gathering, is to confuse people like myself.

In summary, rates did not move much today but mortgage bonds did improve. We are still in a very tight range but I am liking the mortgage bond chart. If we have another up day tomorrow we may see some better pricing. Tomorrow we get Retail Sales report. If the report is stronger than expected, rates will most likely worsen. I am still cautious, but still recommend floating.