At 8:00 this morning prior to the 8:30 economic data, the 10 yr note -6/32 at 3.50% +3 BP, mortgage prices -5/32 frm yesterday's close; the DJIA +54. At 9:00 the DJIA index +28, off its best level; the 10 yr note -4/32 and mortgages traded -4/32.

July PPI, expected -0.2% and +0.1% on the core, came at -0.9% overall and -0.1% for the core rate. Yr/yr PPI -6.8%. Although PPI was weaker than expected, inflation isn't a front burner these days so it isn't the rocker it normally can be.

July housing starts were expected to be up 3.5%, the were down 1.0%; however June starts were originally reported up 3.6% but were revised today to +6.5%. The June revision took most of the sting from the weaker July starts. Total starts were 581K with single family starts up 490K. July building permits, expected to be up 1.4% were down 1.8%; the slower permits does suggest the housing markets are still not able to sustain month over month increases. The initial reaction to the 8:30 reports helped the bond and mortgage markets somewhat but didn't take much away from the better trading in stock index futures.