After falling by triple digits yesterday the Dow followed up with an encore today, falling 116.81 to 17055.87, the first such a back to back loss since June. The S&P 500 fell as well below 2000 to 1982.77 and the NASDAQ closed lower as well. Nothing like armed conflict to reign in the bulls as the 10-year yieldbonds doing well stocks lower dropped by four basis points and mortgage backed securities also closed well with the 30 year Fannie 3.5 coupon settling in at 102.04 in a classic “flight to safety” response.

Such a move in bonds may not offset last week’s rise in residential mortgage rates but if the conflict in Syria begins to show signs of a protracted effort the U.S. economy could see some weakness and mortgage bonds as U.S. Treasuries will be the beneficiaries, keeping financing costs for rental properties near their lows.

This week we’ll see a few economic reports that may have an impact but the specter of not only Syria but Ukraine as well as the European economy might have more impact than any number we see reported. New home sales and Durable Goods orders will be released and it will be interesting to see how the third and final revision of Q2 GDP turns out. Recall the initial Q2 GDP report showed a respectable 4.0% increase and confirmed with the initial revision with a 4.2% increase. However, with regard to economic reports, the most anticipated economic report will be released on Friday, October 3 with the Unemployment Report for September and non-farm payroll counts.

For August, there were a scant 142,000 jobs created when economists were expecting something much closer to the 200,000+ level. Many discounted the decline in new jobs and are waiting for a correction with the September report. Anything near the 142,000 number however and bonds will likely rally.