Stocks are rallying and bonds are selling this morning.

The 10-year Treasury yield remains well below 3% as both U.S. and European debt concerns weigh on sentiment, but its yield did back up three basis points overnight to 2.915%. The two-year yield is one basis point up at 0.375% and the 30-year yield moved two basis points up to 4.210%. The Fannie Mae 4.0 MBS coupon is -4/32 at 100-25. Treasuries have moved mostly sideways in a narrow range since July 12.

The S&P 500 looks to open 6.25 points higher at 1,327.50 while the Dow is ready to climb 62 points to 12,569. On Tuesday blue-chip earnings helped the indexes ascend 21.3 points and 202 points, respectively.  Apple's ability to surprise the market once again after the closing bell has also exerted some pressure on Treasuries.  The company posted record quarterly sales of the iPhone and iPad, helping net income to surge by $7.31 billion, or roughly double the $3.25 billion it posted a year ago.

Gold prices fell 0.67% overnight to $1,590.40 per ounce, just below record highs seen earlier in the week, while light crude oil jumped 1.39% overnight to $98.86. 

In this morning's weekly index from MBA, mortgage applications increased 15.5% overall in the week ending July 15, all thanks to refinancings as purchases dipped 0.1%.

Key Events Today:

10:00 - Existing Home Sales are anticipated to rise to an annualized pace of 4.9 million in June, up from 4.81 million in May. The Pending Home Sales Index, which looks at contracts that have been signed but not finalized, thereby offering a sneak peak of this index each month, jumped a strong 8.2% in May. Some economists are thus quite a bit more optimistic than the consensus, with forecasts as high as 5.2 million units. 

However, "mortgage applications to buy homes declined in April, May, and June, suggesting that the PHSI may be overstating demand," said economists at IHS Global Insight. "Our call is that existing home sales probably increased 4% to a 5-million-unit annual rate in June."

Economists at Citigroup were equally nonchalant about the Pending Home Sales Index, predicting that existing home sales "likely remained range bound in June" as buyer traffic was weak.

Meantime, economists at Janney Capital Markets said the figures should get a boost from the recent decline in mortgage rates.

"Fannie May 30 year mortgage rates declined to an average of 4.23% in June, down from 4.59% in April, equivalent to a roughly 4% decline in monthly payments," they noted. "There's a lag between when lower mortgage rates begin benefiting home sales, but the supportive effects of these lower rates should start to show through in the June and July data. As a result, we're anticipating a meaningful increase in home sales from May's 4.81 million pace back up to the 5.0 - 5.2 million area for the coming two months. That's not enough to make a significant dent in the huge amount of inventory still on the markets, but it's a slow start to working through years of buildup."

6:15 -  Federal Reserve Bank of New York Markets Group Vice President and FOMC System Open Market Account Manager Brian Sack speaks before the Money Marketeers of New York University.