Treasuries and mortgages improved yesterday as the stock market declined; today, as has been the case recently, after a day of improvement in the bond markets prices are weaker. The stock indexes are better this morning, both markets are in tight narrow ranges for the last three weeks. The Case/Shiller April price index declined in April but was the best in months. Property values in 20 cities dropped 1.9% in April from the same month in 2011, the smallest decline since November 2010, after decreasing 2.6% in the year ended March. Phoenix showed the biggest adjusted monthly increase, with prices rising 2.5% from March. Detroit showed the biggest decrease at 2.1%. Ten of the 20 cities in the index showed a year-over-year decline, led by a 17% drop in Atlanta, the only city to show a double-digit decrease. Phoenix showed the biggest year-over-year increase, with prices rising 8.6% in the 12 months to April. At 9:30 the DJIA opened +24, NASDAQ +10; the 10 yr note -9/32 at 1.64% +3 bp and 30 yr mortgage prices down 4/32 (.12 bp) frm yesterday's close. At 10:00 June consumer confidence index, expected at 64.0 frm 64.9, fell to 62.0 and May revised to 64.4 The present situation index at 46.6 frm 44.9 (revised frm 45.9); the expectations index at 72.3 frm 77.3 (revised frm 77.6). The confidence index is the lowest since last January and the expectations index the lowest since last November. No reaction to the weaker data, yet it is another weak report as most reports have been the last six weeks. At 1:00 Treasury will auction $35B of 2 yr notes; demand is expected to be OK but not stellar. Europe still is the centerpiece for global market outlooks as the region is completely unable to solve the debt issues in the EU. Thursday begins the 19th summit meeting since 2010 when the crisis began; no progress so far in attacking the problems head on and there isn't likely to any progress this time around. Four officials led by European Union President Herman Van Rompuy today released a road map to a fiscal and banking union that ran into immediate criticism from Germany for placing too little emphasis on controlling national budgets. The "map" centered on common banking supervision and deposit insurance and a "criteria-based and phased" move toward joint debt issuance. It also suggests that the EU could impose upper limits on annual budgets and debt levels of nations that use the euro. Germany's instant opposition lessened the chances that the summit will end with any plan once again. Nero was said to have sat and played his lute while Rome burned down, today Europe is burning while all the leaders play their fiddles. US interest rates remain essentially unchanged now for the last three weeks; improving yesterday and this morning falling back. There is little chance the bond and mortgage markets will change much until the end of the circus known as the EU summit meeting that concludes on Friday. Based on news reports this morning it appears it will be another summit that fails to accomplish much and in turn should keep US interest rates from increasing. We still hold that as long as the bellwether 10 yr note can hold under 1.70% the outlook will remain positive for the bond markets.