Sales of new single-family houses in October 2011 were at a seasonally adjusted annual rate of 307,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.3 percent (±19.7%)* above the revised September rate of 303,000 and is 8.9 percent (±17.2%)* above the October 2010 estimate of 282,000.

The median sales price of new houses sold in October 2011 was $212,300; the average sales price was $242,300. The seasonally adjusted estimate of new houses for sale at the end of October was 162,000. This represents a supply of 6.3 months at the current sales rate.

Much in the same way that the EU summit from over a month ago drove shift toward "risk-on" trading, current events such as the rumored 517 billion euro IMF package for Italy, the stiff-upper-lipped "pacts" among Euro-Zone leaders, and the potential treaty changes that could clear the way for the ECB to play a more Fed-like role are causing a sharp shift higher for Treasury yields and lower MBS prices. While the IMF denies that it has a credit package in the works for Italy, EU finance ministers are set to meet tomorrow to discuss bailing-out/rescuing/supporting Italy and Spain. Whether it comes out of that meeting or not, the anticipation that some important shoe is about to drop for the EU crisis is putting pressure on bond markets and lifting equities, just like it did a month ago.

After trading no higher than 1.99's since 11/21, 10yr yields are in the 2.07's at the moment and Fannie 3.5's are down 10 ticks this morning to 101-10, well past the longer-term 101-16 support floor. Whether that's to be treated as an immediate trigger to lock or more of first warning sign still needing confirmation, is a matter of personal preference. Regardless, more informed decisions in that regard can be made closer to the end of today's session than the beginning.

The only major scheduled economic data today arrives at 10am in the form of New Home Sales, but it's not expected to be a big market mover. Not only is the report itself relatively less important than other domestic data, but domestic data is relatively unimportant compared to EU headlines. That's not to say that the rest of the week's economic data can't and won't move markets, simply that the most potent driver of bond market changes is still the EU.