Early activity prior to the actual open at 8:30 had stock indexes better along with markets in Europe. The 10yr note yield also better as were mortgage prices. It is earnings season, overall investors and traders are liking what they see, however that is because the estimates had been ratcheted lower after strong Q2 earnings. Corporate earnings and profits expected to decline in Q3 and Q4 - in the world of investments at times it appears investors and traders do not care the economic outlook is slowing as long as data beats the weaker estimates.

This morning at 10:00AM, we have the 10yr at 2.03% and MBSs a positive 12BPS. However, we should have another quiet day today. So far this week there has not been much movement in the bond and mortgage markets - basically in a holding pattern. There has not been much data, as most are waiting to see what happens with the ECB tomorrow and the FOMC next week, thus keeping the markets stable.

This morning the only news today was the weekly mortgage applications from the MBA. Mortgage applications are swinging wildly the last three weeks on new disclosure rules. Hard to draw any conclusions from mortgage applications over the past three weeks.

Yesterday the 10yr note yield rose to test its 20 day average and it held - this morning a little better at 2.04%. 2.00% remains a rock solid resistance while the upside should not move above 2.15%. Still holding minor bullish bias but unlikely to move much until next week's FOMC meeting; even then to drive rates lower for mortgages and treasuries it will take additional weakness in Europe, in Asia and emerging markets. Zero interest rates from the Fed continue to drive investors to equities even as Q3 growth is expected to decline to less than 1.0% growth.

I am still bullish longer term, but right now for those who love to take risks and feel that there is something better in the not so distant future, so with caution, but right now anything short term is being recommended to take these rates as the safe bet against the volatility that still is out there and the lack of movement one way or another.