Stocks and bonds look to be the tale of two fables.  Stocks on one hand continue to tell the story of positive earnings data as day after day, the majority “beat the street”.  Apple reported after the bell yesterday, blowing the doors off expectations.  Morgan Stanley and Wells Fargo posted earnings beats as well with comments from the Stage Coach company that credit deterioration is improving and has “turned the corner”.

Fixed income products (notes, bonds, and mortgage backs) are on a different page with yields falling/mortgage pricing improving on a continued and heightening sovereign debt crisis.  Yields on the Greek 10 year note are over 8.0% as the German Finance Minister expects the country to ask for aid.  He also hints that “creditors may need to assume some of the risk”.  As you can see, we have stocks and their earnings along with bonds and their flight to quality bid both driving the rally bus.

No economic news today.  That will change tomorrow with Weekly Claims, PPI (inflation at the wholesale level), Existing Home Sales, and the House Price Index all on the leader board.  Out right money flows or price action has been light and two way.  We are not seeing the volume in notes and mortgage backs to give us confidence in a continued rally.  That said, we do not expect much of a pullback either.

Currently, the 10 year note is up 10/32’s to yield 3.76%, very close to our range high (low yield) expectations of 3.75%.  Mortgage backs are plus 4/32’s on the day.  Stocks are up a baker’s dozen on the big board as very overbought conditions are in a dog fight with stellar 1st quarter earnings.  Looks like one of those rare days when everyone is happy.