After yesterday’s plunge, the major equity indices are gaining some ground into the afternoon session – albeit not quite enough to make up for yesterday’s losses. Global markets are recovering somewhat after it was noted that Greece is finally siting down and working with creditors on a debt agreement before its economy tanks. The government is running out of cash and doesn't seem to have enough for its next monthly payment to the International Monetary Fund (IMF). If Greece misses a payment it could push the European Central Bank (ECB) to withdraw support to Greece’s National Bank and could cause a very disorderly exit from the Eurozone (or “Grexit”).

When compared with yesterday, today’s domestic economic calendar is rather sparse. There are a few notable items; however they are far from major market movers. First of all, with the average rate on the 30-year fixed mortgage now back above 4.0%, borrowers are starting to pull back from purchasing activity during the busiest time for the housing market. According to the Mortgage Bankers Association (MBA) the total volume for mortgage applications fell by 1.6% in the week ended May 22^nd over the prior week. While overall mortgage volume is still higher than a year ago, it has fallen by a total of 10.0% in the last four weeks. Refinancing applications are very rate-sensitive, and dropped by 4.0% over the prior week with refinancing applications now making up 51% of all applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased by 30 basis points to 4.07%, with points increasing to 0.35 from 0.32 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. While mortgage rates haven’t moved much in the past few days, there has been plenty of volatility in the past few weeks. Judging by the new housing data, the demand for homes is strong, however it’s clear that the consumer is still worried and paranoid about rising rates.

Also worth noting from yesterday’s session was Markit’s initial reading on the purchasing managers index (PMI) for the US services sector. Strength in the service sector is slowing slightly according to Markit’s preliminary reading, down by 1 point in May to 56.4 for the second-lowest reading so far this year. The growth in new orders is the slowest so far this year, with the build in backlog orders at a 10-month low. However, it’s encouraging that the strength in the report is centered on hiring, which is up for the 5^th month in a row. Strength in hiring obviously points to business confidence, and this caused the year-ahead outlook to jump sharply to the best reading since November 2014. With both the housing and the manufacturing sector still trying to get into gear for the rest of the year, the service sector is clearly carrying the US economy.