Kind of a peculiar day so far; the US bond market is weaker while the stock markets in Europe are rallying pushing US indexes higher. Making it peculiar is that economic data out of Europe was not good and at 8:30 US durable goods orders in April were not up to forecasts. Durables were up 0.2% but less than +0.3% expected, when the volatile transportation orders are removed durables were expected up 1.0% but as reported they were down 0.6%. Weekly jobless claims were 2K to 370K, last week's claims were revised from 370K to 372K; the 4 wk average did decline, from 375,500 to 370,000.

As has been the case for months, the US equity market is lemming-like, following Europe wherever it goes. Today much of the data out of Europe was weak but apparently the European markets are focusing on that never ending optimism that the EU will survive and Greece will stay in. Not sure why the optimism though, the summit meeting yesterday didn't accomplish anything; summits in Europe are routine over the last two years---18 of them with no tangible progress. German business confidence also declined more than forecast in May. The Munich-based Ifo institute said today its business-climate index, based on a survey of 7,000 executives, slipped to 106.9 from 109.9 in April. Economists had forecast a reading of 109.4. European services and manufacturing output contracted more than economists forecast in May. A composite index based on a survey of purchasing managers in both industries fell to 45.9 from 46.7 in April. In the UK gross domestic product fell 0.3%, compared with a 0.2% decline estimated last month. Construction output fell 4.8%, the most in three years and more than the 3.0% initially estimated, while services and production were unrevised.

Soft data in Europe, the UK and here in the US hasn't phased the equity markets. Stocks in Europe higher, in the US higher. While we found little to cheer about after the EU summit, the Greek prime minister continues to talk out both sides; yesterday it was Greece is working on plans to exit if the June 17th elections defeat austerity, today he said Greece is likely to stay. Europe's debt crisis is so big that in over two years the leaders continue to tread water and can't solve the insolvable.

The DJIA opened +9, NASDAQ unch. The 10 yr at 9:30 -7/32 at 1.76% while MBS 30 yr prices were down 5/32 (.15 bp) frm yesterday's close.

US treasuries are weaker this morning even after the stock market opened better but turned lower within 10 minutes of the slightly better start; obviously, mortgage markets are following as they do. This afternoon Treasury will auction $29B of 7 yr notes putting a little pressure on the long end of the curve after yesterday's so-so 5 yr auction.

What is known, and what isn't? A strange market so far this morning; the economic releases I Europe and China weaker, the weekly claims and durable goods orders this morning not strong yet Europe's key stock markets rallying and not much change in the US equity market while the bond and mortgage markets slightly weaker. With economic data softening in most global markets and nothing outright from Europe's so-called monthly summit meeting yesterday we find the action this morning disconcerting that something is missing. The US 10 yr note does have a big resistance at 1.70%, it won't be broke easily, and possibly not at all but trade today so far is peculiar.