The bond and mortgage markets started better prior to 8:30, but June housing starts and permits exceeded expectations and the bearish trend resumed with selling. At 9:00 the 10 yr note traded -6/32 at 3.59%, mortgage prices -4/32, the DJIA was -40 points. At 9:30 the DJIA opened unch, 10 yr note -14/32 at 3.62%, mortgage prices -9/32. (see below for 10:00 levels)

June housing starts were expected to be down a little, they jumped 3.6%; building permits were also a lot stronger than forecasts, +8.7%. In May starts increased 17.3% but most of it was in the multi-family sector, in this June report single family starts were up a very healthy 14.4%, in May single family starts were +5.9%. The increases in permits was a surprise and implies that weather issues that were a focus in the May data may not have been a fluke after all. The increase in single family starts is the largest month over month increase since May 2004. The report adds even more credence to the view that the housing sector may be seeing some light; at least that is how markets are taking it this morning, sending treasury and mortgage prices lower. Slice it, dice it, argue with it; the markets will take it as a sign those green things Bernanke coined are growing.