Good Morning Folks...Happy Monday

Lehman Brothers released a report saying that "Although there has been a significant improvement in markets since the turmoil of March, conditions are still "far from normal." The Fed's actions to date have resulted in significantly lower borrowing costs for non-financial borrowers, but we think much of this is due to a rationing-out of lower quality borrowers. We expect the crunch to intensify and spread. Securitization markets are still impaired, and banks are in no shape to pick up the slack, in my view." A sobering and scary statement!

Rates this morning are almost unchanged from Friday, with the 10-yr wallowing around 4.02% and mortgage prices a tad better. You may recall that on Friday, the Michigan Consumer Sentiment Index fell to a 28-year low, but the Chicago Purchasing Managers index rose to 49.1 in May, higher than forecast, from 48.3 in April. Although we have the unemployment data on Friday, it is relatively quiet this week economic news-wise.

The Institute for Supply Management's (ISM) manufacturing index comes out later this morning, and is a measure of manufacturer sentiment. Analysts are expecting to see a 48.0 reading in this month's release, meaning that sentiment slipped slightly during May (a reading below 50 means that more surveyed manufacturing executives felt that business worsened during the month than those who felt it had improved).

Tomorrow we have the Commerce Department's release of April's Factory Orders data, the revised 1st Quarter Productivity and Costs report will be released Wednesday morning along with the Institute for Supply Management's services index. Thursday we have Jobless Claims, and then on Friday the Labor Department will post May's Employment data. Analysts are expecting to see the unemployment rate climb to 5.1% with approximately 52,000 jobs lost during the month.