We haven't been seeing many good examples of the so-called "stock lever" in the past weeks and months, but it appears to be relatively well-connected this morning. Stocks traded lower just slightly at the domestic open and bond markets followed by moving lower in yield.

After this morning's round of economic data stocks sold off at a quicker pace, now testing the 1360 level after trading over 1365 most of the morning in S&P futures.

Bond markets have done a fairly good job of tracing these moves in terms of 10yr and MBS yields. In terms of price, Fannie 3.5's are unchanged on the day at 103-15 but have traded up to 103-16+ in the past half hour.

10yr yields bounced at 1.97 resistance which was the lowest seen on Friday, and during a good surge of volume. That latest bounce had an air of independence from stocks, suggesting that the previously observed stock lever connection could be a passing fad in favor of "trading the range . 10's are already back up into the mid 1.98's.

- Factory Orders -1.0 Pct (Consensus -1.5)
-Durables Orders Revised To -3.7 Pct From -4.0 Pct
-Nondefense Cap Orders Ex-Aircraft Revised To -3.9 Pct From -4.5 Pct
-Factory Orders Ex-Transportation -0.3 Pct Vs Dec +0.7 Pct
- Factory Orders Ex-Defense -1.2 Pct Vs Dec +1.6 Pct
-Nondurables Orders +1.3 Pct Vs Dec -0.2 Pct
-Computers/Electronic Products Orders +0.8 Vs Dec -0.2 Pct
-Total Manufacturing Inventories +0.6 Pct Vs Dec +0.2 Pct
- Inventories/Shipments Ratio unchanged
-Factory Orders Largest Decline Since Matching -1.0 Pct In Oct 2010

Non-Manufacturing 57.3 in Feb (consensus 56.1)
business activity index 62.6 in February (consensus 59.3)
new orders index 61.2 in February vs 59.4 in January
employment index 55.7 in February vs 57.4 in Jan
prices paid index 68.4 in February vs 63.5 in Jan
PMI index at highest since February 2011
Business Activity index also at highest since Feb 2011

"The NMI registered 57.3 percent in February, 0.5 percentage point higher than the 56.8 percent registered in January, and indicating continued growth at a faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 62.6 percent, which is 3.1 percentage points higher than the 59.5 percent reported in January, reflecting growth for the 31st consecutive month. The New Orders Index increased by 1.8 percentage points to 61.2 percent, and the Employment Index decreased by 1.7 percentage points to 55.7 percent, indicating continued growth in employment, but at a slower rate. The Prices Index increased 4.9 percentage points to 68.4 percent, indicating prices increased at a faster rate in February when compared to January. According to the NMI, 14 non-manufacturing industries reported growth in February. The majority of comments from the respondents reflect a growing level of optimism about business conditions and the overall economy. There is a concern about inflation, rising fuel prices and petroleum-based product costs."

IIF's Dallara Says Confident Greek Debt Swap Will Succeed
(Reuters) - The chief negotiator for private sector holders of Greek bonds expressed confidence on Saturday that a bond swap deal which is a key part of Greece's bailout programme will be completed successfully next week.

Source: ECB Expects Greece PSI Participation Will Be Too Low
(Dow Jones)--The European Central Bank expects that the participation rate of Greece's private creditors in the planned voluntary debt restructuring deal will be too low and collective-action clauses will have to be invoked, a person at the central bank told German weekly magazine Der Spiegel.

Greece may need more help
(Reuters) - Greece's second bailout may prove insufficient and a topping up of the euro zone's permanent bailout fund cannot be ruled out, the Austrian Chancellor was quoted as saying in a newspaper on Sunday.

Euro zone's private sector back in the doldrums in Feb: PM
(Reuters) - A sharp downturn among Italian and Spanish businesses dragged the euro zone's private sector back into decline last month, dashing hopes the region would avoid another recession, a survey showed on Monday.

Private holders of Greek debt should reject swap offer, DSW says
Private investors in Greek government bonds should reject a voluntary swap offer aimed at reducing the country’s debt load, according to German private investor lobby group DSW.

Volume and volatility were fairly light in the overnight session with fewer than 200k 10yr contracts trading before 830am and yields having held a range from 1.963 to 1.99.

Treasuries strengthened into the early morning EU data as Italian and Spanish services PMIs (production manager indexes) showed continued declines. CDS's rose for both counties and spreads against German 10yr government bonds widened slightly.

A few hours later, slightly stronger than expected Euro-zone Retail Sales figures helped stem the loss and send the range back in the other direction, with 10's rising into the 1.99's at the domestic open. Yields have been grinding sideways there in the first hour of trade.

MBS are similarly sideways just north of the important 103-10 pivot point in Fannie Mae 3.5's and are 3 ticks lower from Friday's 5pm levels, currently 103-12.

The first economic data of the day is still an hour away with ISM Non-Manufacturing and January Factory Orders.