Treasuries and mortgages opened better early this morning; at 8:30 the 10 yr note was +8/32, mortgage prices +6/32. At 9:00 the 10 yr +4/32 and mortgages +2/32; the stock index futures at 9:00 were pointing to a lower open, the reason we had better early morning prices in the rate markets. At 9:30 the DJIA opened -50, the 10 yr +7/32 and mortgages +3/32. (see below for 10:10 levels)

At 9:00 the May Case/Shiller home price index was right on estimates; home prices in May on a yr/yr basis declined 17.1%, slightly better than the April yr/yr decline of 18.1%. Not much we can take from the decline. Trying to make it look good the economic optimists hung on the slight fall in price declines. We wonder why a 1.0% price improvement can be seen as home price improvement; data that close is subject to an error of at least 5.0%. Nevertheless these days anything not increasingly in decline is taken as more evidence the recession is over and good times are right around the corner; a view we do not subscribe to as long as foreclosures continue to increase, unemployment continues to increase, unemployment claims increase and continuing unemployment compensation is beginning to run out for millions presently drawing unemployment