Stock futures are weaker and benchmark interest rates are experiencing a flight to safety ahead of what is expected to be another foul read on the health of housing this morning

S&P 500 futures are 12 handles lower at 1053.50 and the 2.625% coupon bearing 10-year Treasury note is +0-22 at 100-29 yielding 2.522% (-8bps).

Rate sheet influential MBS price levels are being led higher by a rally across the yield curve. The October delivery FNCL 4.0 is +0-08 at 102-17 and the FNCL 4.5 is +0-04 at 104-05. Production MBS coupons are 4 bps wider vs. the 10-yr note and 4bps wider vs. the 5-year Treasury note. Mortgages are being outperformed by Treasuries.

Key Events in the Day Ahead

July Existing Home Sales will be released at 10:00am.

Economists forecast a 12.0% decline in sales of previously owned homes after existing home sales fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May.  Total housing inventory at the end of June rose 2.5 percent to 3.99 million existing homes available for sale, which represented an 8.9-month supply, up from an 8.3-month supply in May. This was the largest amount of existing homes for sale, in terms of months of supply, since August 2009.

OTHER DATA AND EVENTS

• 8:45 - Federal Reserve Bank of Chicago President Charles Evans speaks at Indianapolis Neighborhood Housing Partnership Community Breakfast. Q&A expected.
  
• 10:00 (Aug) Richmond Fed Index. he  Previous: 16.0
• 10:15 Fed Outright Treasury Coupon Purchase (02/15/2013-07/31/2014)

ISSUANCE

• 11:30 Treasury auctions $34 bln 4-week bills and $25 bln 52-week bills
• 1:00 Treasury auctions $37 bln 2-year notes
• KommuneKredit, benchmark 3-year; BAML/CS/HSBC