The housing market decline continues as housing starts and single-family home permits fell in May, though total permits increased due to a rise in apartment permits. Equities suffered their second week of decline in the last three weeks and are in danger of posting their first losing month since February. In contrast with the housing data and equities decline were an increase in leading indicators and a steeper Treasury curve. The steeper Treasury curve may indicate that investors are expecting increased economic growth is ahead. The Federal Open Market Committee (FOMC) meets later this week and while futures contracts are pricing a zero percent chance of a target rate decrease, the language of the release will be scrutinized for changes that may indicate what the next move will be. Futures indicate investors see an 86% chance the Federal Reserve will keep the funds rate target at 5.25% though the end of 2007.

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