The benchmark 10-year Treasury yield briefly moved above 3% after Fed chairman Ben Bernanke's press conference on Wednesday, but it's now is four basis points firmer in early trading at 2.936%.The Fannie Mae 4.0 MBS coupon is +8/32 at 101-04 and the 2s/10s portion of the yield curve is 2bps flatter at 258bps wide.

"Markets are under pressure this morning as ECB President Trichet said that financial stability risk signals in the euro area are 'flashing red,'" said economists at BMO Capital Markets. "Investors [are] still digest[ing] the Fed's lack of interest in further easing. Indeed, at this point there's no indication that QE3 is coming."

S&P 500 futures are down 0.80% at 1,269.50, below key support at 1270. Dow futures are off by 0.61% at 11,945

Light crude oil tumbled 2.69% overnight to $92.86 per barrel, while gold prices dropped 0.93% to $1,539 per ounce.

Key Events Today:

8:30 - Initial Jobless Claims finally saw a decent-sized, 16k decline last week. Yet at 414k, claims were still above the 400k mark the for 10th straight week. The median estimate looks for a smaller decline to 410k this week, indicating that job growth in June is limited at best.

Economists at Citigroup were slightly more optimistic: "Initial jobless claims likely continued to retreat during the week ended June 18. Though the four-week moving average remained above the 400,000 threshold, it was still 20,000 below the mid-May level. This bodes favorably for payrolls ahead."

10:00 - After posting a surprise 7.3% jump in April, the annual rate of New Home Sales is anticipated to fall to 310,000 in May, down from 323k in April. Why the change? Answer: why the gain in April? Economists point out it was little more than statistical noise as the market for single-family homes continues to scrape along the bottom.

"While improvements in housing starts and building permits add some upside risk to our May forecast, we do not believe these small gains give us sufficient reason to expect new home sales will break free of the relatively stagnant trend," said economists at Citigroup. "Construction activity increasingly has been driven by additions and alterations, rather than new dwellings. The low level of sales - both new and existing - suggests that people are choosing to stay in their homes. As a result, investment in renovations has not fallen much at all during the housing downturn."

11:00 - Treasury will announce the terms of 2-,5-, and 7-year debt to be auctioned in the following week.