- Equity markets are posting modest gains after a stronger than expected July durable goods report. Summer volumes remain expectedly low with much attention remaining focused on tropical storm Gustav and its likely effects on energy production. October crude has spent the morning higher but as backed more than $2 off of its best levels following the release of weekly inventory data. Crude is currently up $1.55 at .$117.80 while natural gas has added another 2% to trade at $8.56. FRE+10% and FNM+8% are surging for a third day in a row as more commentators weigh in on the GSEs: NJ Governor Corzine said the Treasury will probably take over the firms while Rep. Frank said the GSEs are "doing better than other companies" and speculated that a bailout is "not inevitable." GS+4% is up despite word that New York AG Cuomo is probing the firm's relationship with Fidelity over the latter's sale of ARS. Solar names are under pressure, at least partially due to a negative WSJ article that asserted that the sector could take a hit if Congress does not renew tax credits. SOLR-7% made its first earnings report as a publicly trading company yesterday, showing the firm in the black and guiding solid growth for the coming quarter and full year. SOLF-10% is under pressure despite a positive quarterly report, thanks to growing pressure on margins. The company's Q2 gross margins fell q/q and it sees further pressure in Q3, with margins recovering in Q4. The latest round of retail reports is mixed, with BWS-5% and DLTR-5% reporting more or less in line with expectations and guiding well under estimates for the year. JCG-5% missed and cut its forcast for the year, earning itself a batch of downgrades and price target cuts among analysts. On the upside, bookseller BGP+25% reported a smaller loss than expected, while upscale retailer TLB+18% is surging after predicting that the firm will earn well above analysts' estimates for the year. Various healthcare stocks are getting wacked after disclosing trouble in clinical trials. AMLN-13% reported further problems with its diabetes drug Byetta, saying that another four patients have died, on top of the two deaths reported by the FDA last week. Baird and Soleil cut the name overnight. Byetta partners LLY and ALKS are under pressure this morning as well. BMY-3% is also under pressure after admitting yesterday that its Apixaban clinical development program did not meet its primary endpoint. Investors are dumping CEGE-75% after the firm said it is shutting down its Vital-2 GVAX prostate cancer drug trial on the advice of the Independent Data Monitoring Committee, which noted an imbalance of deaths in the two treatment arms of the study. NEXM-82% is doing even worse after announcing it would not submit an NDA for its NM100060 toenail infection candidate given its disappointing initial Phase III results. SIFY+14% after inking a deal with Google to develop applications for the Indian market. +6% after receiving a €100M offer for its Rossignol unit. IKN+10 after agreeing to Rioch's $17.25 offer.

- Interestingly, the EUR/USD moved higher in the overnight session as German states reported CPI figures that were well below expectations. ECB officials, including Weber, were quick to point out that the latest data is not going to force officials to consider cutting rates anytime soon, helping to further buoy the euro despite the soft data. Underlying USD momentum persists, helping Cable make a fresh two-year lows once again, with the pair now approaching 1.83. Treasury prices moved a little lower in the early going, helped by a stronger than expected durable goods number in the US. Futures prices have since moved back towards unchanged ahead of this afternoon's two-year note action and tomorrow's five-year note.