Markets are being driven today by renewed EU concerns.  Nothing has changed except for perception – a reminder that it is perception not reality which drives markets especially equities.

We will continue to see these EU swings as the folks there fabricate another plan to mitigate the damage and then have folks realize 2-3 weeks later that it will not fix the problem.

It’s a tough time for markets, but one bright spot is the save haven trade of Treasuries and mortgage backed securities (MBS). Rates drop as global investors buy MBS as a safe alternative to EU chaos.

Here’s today’s rally in the FNMA 3.5% coupon many lenders use as a benchmark to price rates (used with permission from MBSLive). Even if you’re shifting to the 3% coupon as a rate pricing benchmark, it’s up even more today: +34 basis points to 104.25.

Here is today’s only U.S. data point.

Chicago Fed National Activity (June 2012)
– Level is -0.15.  Previous was revised to -0.48.
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See Also:
– Fears mount over wilting Spain economy and government finances (FT)

– Treasury yields hit new record lows (WSJ)

– $TLT, $MBB, $TNX, $ZN_F