The "Keep It Simple Stupid" theory seems to be the most fitting method of market watching these days. Investment horizons are short and while participation is slowly growing, trading volumes are still below average. Investors are clearly in a holding pattern, waiting for more guidance.  No need to over-analyze noncommittal range bound behavior....

Global equity indexes traded lower overnight and benchmark interest rates felt the love of a modest flight to safety bid. Again this reallocation occured in light volume and is not indicative of a major shift in sentiment.

The August Fannie Mae 4.5 MBS coupon is currently bid +0-04 at 102-23. Remember your loan pricing is now based on the August coupon as the standard file delivery deadline is behind us.

The 10 yr note continues to bounce around between pivots in a wide but well-defined range. 10s are currently up against that gray trendline. If 10s break trendline support and keep rising, expect to see a change of direction at 3.24% and another test of 3.22%. The range is consolidating...

The same story goes for stocks. Choppy range bound behavior.  Check out how recent candlesticks have long wicks and tails but tiny little bodies. This means the daily trading range is wide but the close hasn't been far from the open. This is indicative of an indecisive market.

Looking ahead the S&P is holding gains above the 38% fibonacci retracement, right below that is the 200 day moving average at 1111. I would expect traders to poke and prod at this pivot level. If 200dma support breaks down, the next level of support lies around 1102 then 1090.

I didn't spend much time talking about the Yuan yesterday because the announcement didn't really cause all that much commotion in my opinion.  The move might look huge but it wasnt...6.8291 to 6.7976. The CHY is currently back up to 6.8136.

If you're a stock bear (most mortgage rate watchers are) then the bearish breakdown in the Euro might be reason to celebrate. Volume picked up after the Euro broke 1.2351. The next test of support is at 1.2276. Further declines in the euro would likely lead to weaker stocks and a flight to safety into benchmark interest rates.

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The range trade is in play and markets are still acting non-committal. Plus...even though weak housing data is on the radar of market watchers, the pending FOMC statement will prevent participation from accumulating and keep both stocks and bonds from moving too far in either direction.