- US equity markets opened lower in thin trade as money flowed to Treasury markets. With UK markets closed volume is light with traders noting technicals and the ever present financial sector as the predominate driver in early trade. July existing home sales rose to a better-than-expect 5M, up 3.1% m/m, with prices seen falling further and inventory hovering near record highs. Buyers snapping up deeply discounted properties in parts of the country hit hardest by the housing crisis were cited as the movers behind the mildly positive reading. Initial reaction sent the homebuilders into the green but they have since backed into the red trading at pre-release levels. At the weekend's meeting of world central bankers, some of the top economists from the US said they expect the US Treasury will be forced to inject funds into the two GSEs, but they are not sure whether this will be enough to help the US economy. After opening down more than 8%, FRE and FNM have both retraced significantly, with Freddie +7% and Fannie +2%. Major financials are moving lower once again pressuring stocks after Friday's uptick, lead into the red by LEH-4% and MER-2.5%. Lehman takeover chatter cooled off over the weekend, with the London Times reporting that the Korea Development Bank (KDB) has refused to rule out bidding for the firm but is saying that any approach is not imminent. The WSJ's Heard on the Street column reported on Sunday that US investment bankers are bearish on the second half of 2008, with concerns among bankers that the outlook has deteriorated further. In other news, CRS-4% is down after increasing its special litigation reserve and cutting its FY08 EPS guidance following a recent court decision in an environmental action involving the disposal of manufacturing waste. After months of attempts at deals with various parties, GW said it is being aquired by PDS-7% for $2B in cash and stock. AMD+5% is strong after announcing it is selling its digital TV unit to Broadcom.

- Currency markets are fairly quiet with the yen showing some relative strength after news of Denmark's first bank bailout in 15-years weighs on demand for higher yielding currencies. With US stock markets nearing new session lows the USD/JPY is making new lows below 109.50. The greenback is managing to cling onto positive territory against the Euro despite strong PPI data out of Spain overnight. Reminder: German IFO data is expected tomorrow. Oct crude has spent most of the morning in a $2 range down marginally at $114.50.