Several trends in the last week are outlined by Morgan Stanley here.

even though the overall stock market did relatively okay on the week, with the S&P 500 ending down 1.2% after a pullback Friday from a record close Thursday, financial stocks (and their credit spreads) were hammered, which was of more concern to bond investors than the overall equity market performance. With investors focusing on deteriorating credit conditions and fleeing to the safety of Treasuries, economic data are pretty much irrelevant at this point. Generally market-unfriendly results from the key data reports — a marginally worse-than-expected CPI inflation report, upside in the key early regional manufacturing surveys that pointed to another strong ISM report, solid jobless claims data that suggested a solid employment report, and a surprising gain in housing starts that pointed to a much smaller decline in residential investment in 2Q than has been seen in some time, and a sharp rise in factory output — had zero market impact. Even Fed Chairman Bernanke’s relatively hawkish monetary policy testimony that evinced no significant concerns about the ongoing risk reduction trade and, in our view, confirmed that the bar remains quite high for a change in Fed policy in either direction for the foreseeable future was a non-event for investors

Looking forward, Morgan expects

We expect June existing home sales to fall 1.5% to a 5.90 million unit annual rate. The pending home sales index continues to drift lower, pointing to a further slide in resales…The survey of homebuilders continues to show some gradual deterioration, so we look for another 1.6% dip in June new home sales to a 900,000 unit annual rate. While we suspect that sales are approaching a sustainable pace, the market still needs to work through an inventory overhang.

Maui property owners should hope the credit markets settle down and that the home sales reports come in stronger than expected.