Not much in the way of economic data this week; the equity markets are still absorbing that the economy may not be on the recovery path that had been mapped recently. The June employment report sent many analysts back to the drawing boards to re-assess their more rosy outlooks. Non-farm job losses were over 100K more than expectations (-467K) rattling the equity markets with the DJIA taking a 223 point hit, NASDAQ -49 and S&P -26.

A few minutes ago, the ISM services sector data (10:00); the overall index was expected at 46.0 frm 44.0 in May hit at 47.0. New orders component at 48.6 frm 44.4, prices pd at 53.7 frm 46.9 and employment at 43.3 frm 39.0. Any reading under 50 is contraction, but the recent ISM manufacturing and this service sector report suggest some improvement.

The rate markets this week will contend once again with Treasury borrowing. Today Treasury will sell $8B of 10 yr inflation indexed notes; through the rest of the week Treasury will add another $65B of borrowing.

Wednesday this week the G-8 meeting; comments from China over the weekend confirm there is no immediate concern that the dollar might be replaced as the world's reserve currency. Although off the table now, it will be an issue that will not go away as long as the US is being overwhelmed with massive budget deficits and the dollar continues to fall.