A little better start this morning but inter4est rates continue in a narrow range ahead of the 3 day holiday. With US markets closed on Monday and the rest of the world working, the bond and stock market should trade in a tight range with the bond market not likely to see a lot of selling today. The bond and mortgage markets will close at 2:00 this afternoon with most traders out by 12:00. The US dollar continues to gain strength over the euro on Europe's debt crisis that isn't close to any resolution. The euro fell against the dollar and yen for the fourth day amid concern Spain's regional governments may lose access to capital markets. Spain's government is analyzing "with all caution" requests from regional governments to help them regain access to capital markets. The Italian prime minister told an Italian television station yesterday that the majority of EU leaders at a Brussels meeting this week backed joint euro-area bonds. He added that Italy can help persuade Germany to support Europe's "common good" as well. Germany is opposed to euro bonds and has only one thing on its agenda, continue the severe austerity moves that are not working and could well break up the EU unless there is more emphasis on improving economies with increased spending. Euro-area bonds lower borrowing costs for the currency's most debt-stricken members by making repayment the responsibility of all 17 countries. At 9:30 the DJIA opened -15, NASDAQ +1; the 10 yr note +10/32 at 1.75% -3 bp and MBS 30 yr price +6/32 (.18 bp). At 9:55 the final May U. of Michigan consumer sentiment index was expected at 77.5 down from 77.8 two weeks ago at the mid-month sentiment. The index increased to 79.3 the highest reading since Oct 2007 and from the final read at the end of April at 76.4. The current condition at 87.2 frm 87.3 at mid-month, expectations at 74.3 frm 71.7 and the 12 month outlook at 91 frm 88. The better sentiment took the stock indexes off their lows but not into the black; the rate markets didn't show much reaction to the better sentiment as the improvement is likely due to one thing, the decline in gasoline prices. The report does present volatility. The rest of the day will be on very light volume and with little changes, The bond and mortgage markets close at 2:00 this afternoon.