- Markets have managed to post modest gains in choppy trading this morning as traders show enthusiasm for the surprisingly strong housing and durable orders data. Oil is supporting equities, extending its downward slide and briefly testing its 100-day moving average. Lehman Brothers -4% shares are moving lower as reports recirculate that the firm may be considering a sale of its Neuberger Berman asset management unit. BAC-1% is off its worst levels after falling 4% after the open; Yesterday evening Keefe, Bruyette & Woods expressed skepticism about the bank's proposed buyback. "It's prudent to have a plan in place at this time; it's not prudent to actually be buying shares back," said a KBW analyst. FRE and FNM are only off 5% mid morning, after falling nearly 15% a piece in early trading. Other financials are mostly not rallying with markets, and multiple stories highlighting the segments' deep troubles are making the rounds. The WSJ's Heard on Street looked at BAC's aggressive markdowns of CFC's assets and the potential implications for the entire banking sector, noting that the abrupt end to the recent rally in financials showed how little confidence investors have in the sector. The article also said that recently released details from BAC's buyout of the mortgage lender shows that big losses could still occur at banks. Meanwhile, online foreclosure marketplace Realitytrac.com reported that US foreclosures rose 121% y/y in the second quarter, with Nevada, California and Arizona posting the top state foreclosure rates. Airlines are thriving thanks to crude, shaking off several debt ratings downgrades from S&P: UAUA+11%, DAL+10%, AMR+8% and NWA+8%. Shipping line HRZ+14% is doing very well after beating EPS estimates. But falling crude isn't helping YRCW-8% despite the trucking company's solid results. BUCY+15% after coming in well above EPS and revenue estimates. And after reporting a massive quarterly loss, investors are showing some enthusiasm for AXL+4% restructuring plans, supported by positive comments from analysts. CROX-40% is down dramatically after very negative guidance yesterday afternoon. JNPR +13% RMBS +13% and RVBD +13% earnings and guidance are buoying the Tech sector.

- Treasury yields remain near their highest levels of the session after getting a boost from the durable goods and housing data which beat expectations. The curve is a bit flatter with the two-year yield rising closer to 3% to 2.67% while the ten-year yield is higher by closer to 2% at 4.08%. European bonds encountered a choppy sessions safe haven flows were eventually eroded as equities maintains a stable tone.

- The USD managed to recover against its European majors during the course of the New York morning, aided by the economic data, which has helped offset earlier concerns of risk aversion seen at the European open. The EUR/USD cross was near session lows after durables data; USD is being complemented by lower oil prices which seem to focus on the ex-defense portion of the reading, which came in at +0.1%. Crude tested its 100-day moving average at 122.55 for the first time since early February. The USD/CHF cross is retesting the 1.04 level, while GBP/USD is back below the 1.99 area; dealers are noting that the pair's support at 1.9810 level. The JPY carry-related currency pairs recovered from a shaky European open as the EUR/JPY cross regained a foothold above 169 after tested 167.50 earlier in the session. USD/JPY briefly dipped back below its 200-day moving average to elected weak stops and moved back above its week's high of 107.99.