Interest markets are starting weaker this morning after an unchanged session yesterday. As we noted in yesterday's afternoon commentary the 10 yr note once again resisted breaking into new low yield territory, failing at 3.42% intraday. Mortgage prices yesterday were generally unchanged. This morning at 9:00 mortgage prices -10/32, the 10 yr note -12/32 3.49% +5 BP, the DJIA index +19. At 9:30 the DJIA opened +8, 10 yr -10/32 and mortgages at 9:30 were down 8/32.

At 8:30 weekly jobless claims were -10K, right on the forecasts; last week's claims were revised up 4K to 580K, this week 570K. Continuing claims, more relevant than the weekly numbers, dropped to 6.133 mil from 6.25 mil last week, not much of a decline but any decline is welcome. Also at 8:30 Q2 preliminary GDP was expected to be -1.5% frm -1.0% originally reported n the advance report last month. It was unchanged from the advance, and all internal components in the data were also unchanged. Not much reaction to the slightly better GDP in the stock market but it did add some pressure to the bond market.

Next today; at 1:00 Treasury will conclude its $109B of auctions with $28B of 7 yr notes. Some concern among traders that it may not get strong demand, mainly based on the odd ball nature of a 7 yr term. So far the auctions this week have been well bid given the angst that as the debt increases investors may demand higher rates to fund it. The White House is now saying $9T debt over the next 10 yrs, while the CBO is seeing $7.1T; kind of interesting that the political forecast is larger than the bi-partisan CBO estimate. In either case in the next 10 yrs the deficit will exceed the overall total of all annual deficits since the US began. (Read that again)

The Fed's Lacker, the maverick Fedster, is out saying the Fed may not need to complete its total commitment to buy $1.25T of MBSs. Lacker is way out there believing the economy will rebound and the Fed may not need to support the mortgage markets. If he wants the economy to recover more rapidly he should recognize that supporting the mortgage markets is a way to achieve that. Higher mortgage rates are not what we can handle now. "With the economy leveling out and beginning to grow again later this year, and with bank reserve demand ebbing as financial conditions improve, I will be evaluating carefully whether we need or want the additional stimulus that purchasing the full amount authorized under our agency mortgage-backed securities purchase program would provide." Lacker said today in the text of a speech.

The Fed is resisting a court order to reveal who got what from all the bailouts claiming "The immediate release of these documents will destroy the board's claims of exemption and right of appellate review." The Fed went to say it would cause irreparable harm to the various institutions that got money. Well, take that and stuff it; while we fully support the Fed's independence as a very necessary factor to remain independent from political involvement, we the tax payers have a right to know, especially at these times. Forget those that took the money, I for one want to know who and what. If those involved are so weak they can't stand the light of day then they are likely institutions that need to be outed.