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In early trading, MBS were slightly lower as equity futures were indicating a stronger opening after the steep sell-off on Friday. The equity markets opened higher as expected. The 10-year note yield is up a few basis points but holding under 3.00%. European stocks are trading higher despite the expected downgrade of Ireland's sovereign debt. More earnings reports are due today with the main focus on technology companies which will be reporting after the market close today.

There are no economic reports due out today. We do expect the equity markets to recover some of their losses from last week but we see no big push for a move significantly higher. We expect more sideways trading and a thin volume week. We expect the bond and mortgage market to take their cues from equities. As has been the case, we look to the last hour of trading in the equity markets for more direction.

Senior personnel are on holiday this week as there is little in the way of economic data. Analysts will be paying close attention to weekly jobless claims due on Thursday morning. The big question on everyone's mind: are we seeing a new trend in claims or are we seeing just a temporary decline in claims?

Crude oil futures are up about $1.00 on a Wall Street Journal story that China has exceeded the US in energy use. Gold futures are down about $7.00.

This Week's Economic Calendar:
Tue 7/20/10 8:30 Jun Housing Starts 563K (593KMay)
8:30 Jun Building Permits 555K (574K May)
Wed 7/21/10 7:00 MBA Mkt Index 7/16 (-2.9% prior)
10:35 Crude Inventories 7/16 (-5058K prior)
Thu 7/22/10 8:30 Weekly Claims 7/17 +18K to 447K
10:00 Jun Existing Home Sales 5.10M (5.66M May)
10:00 Jun Leading Indicators -0.3% (+0.4% May)

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