11:49 am - Dollar Index: The index has been caught near 79.90 and may stall with tomorrow's
payrolls report due tomorrow. Economists are expecting the report to clear zero and head back to gains, but the market is hearing "whispers" in the -50K area, better than the previous -85K, but still ugly
11:38 am - EU: BMO's Andy Busch notes "Of course, Greece is not the only country with major fiscal problems. Portugal, Spain, Italy, and Ireland are all seeing their sovereign CDS prices shift out significantly with Portugal now at the level Greece was at during December. This is the first true test of the Maastricht marriage for all of the Euro zone members and highlights the major problem with the construct: it's not a true union.
Case in point, it seems the IMF is the only body that may have the legal capability to assist these countries in their time of need. This reminds me of something, what is it?
I'm thinking of what happened between the shotgun marriage of Bear Stearns to JPM and the failure of Lehman. Nothing. Nothing happened for 6 months even though US authorities knew they could potentially see another major problem. This is what I think could be happening in the Euro Zone and with the European Union. The ECB and EU know they have a problem with some of their members not meeting the 3% debt to GDP metric and yet there doesn't seem to be any action to legally assist these countries or have the legal authority to create something like a TARP.
This is the test many have predicted that would eventually come for this quasi-union. Given the sloth-like movement of the EU parliament, it may take a true crisis for them to create what is needed to avoid this in the future. The clock is ticking on the EU/ECB and they're wasting time."
11:14 am - Issues: Valero Energy selling $400M 5-yrs and $850M 10-yrs - Reuters
11:02 am - Bills: Treasury will sell $24B 3-mos and $27B 6-mos Monday
11:00 am - Bid: The buck has been running higher, bouncing back to the best levels since July with the index trading to 79.93 with sights on the 80.15 area as the euro gets pummeled. The regional currency has gotten crushed to its worst since June, slamming through the 1.38 point to tag 1.3778. The response to the fiscal problems in the region has not been aided by Trichet following the policy meeting, even as he expressed confidence on Greece. The market continues to price out the risk on sovereign debt, with CDS spreads rising and infecting the region, seeing added pressure as Portugal bungled its auction Wednesday, while Spain has also been sucked into the mess along with other large deficit locales. The yen was bid on the safety plays, ticking back to 90.34 per buck, while trading back to the best on the euro since March, with sights on 123.80 per. The pound fell while the BOE put a stop to their "quantitative easing" program, but left it open to further purchases should "the outlook warrant them." Gold got slammed back off to early November levels, with spot 1073.35 (-36.45) while crude also was drilled lower now 74.74 (-2.24)
10:29 am - Mortgages: Freddie reports mortgage rates rose over the past week with the 30-yr average 5.01% from 4.98%, 15-yrs were 4.4% from 4.39% and 1-yr adjustables 4.22% from 4.29%
10:09 am - Holding Bid:
Factory orders improved but will have little impact on trade with the market continuing to pull higher. WSJ reports "the Markit SovX Western Europe index -- which tracks the cost to insure against a sovereign debt default among a batch of European states -- hit 1.00 percentage point for the first time, driven higher by escalating worries about fiscally-challenged Greece, Portugal and Spain...These concerns, in turn, are sending shivers through the broader markets where European companies raise money by selling corporate bonds. Earlier today, the Markit iTraxx index for European firms with investment-grade credit ratings hit about .0845 percentage point compared with 0.815 percentage point yesterday. The same thing happened last week, when Greece's debt-default insurance costs hit a record high...At a certain point, if investors are worried about the creditworthiness of entire European countries, it may make sense to worry about companies within those countries, too."
09:58 am - New Highs: The market is making a push to higher levels with the wings dragging as the 10-yr aiming for the 3.575% yield. Bonds are riding the safety wave as is the buck, which added to its bid once the first run of data went through. The index has ticked up to 79.81 while the euro continues to deteriorate having backed off to 1.3803 the lowest since June while flirting with the week's worst on the yen.
09:35 am - Issues: Kraft launched $1B 3.25-yrs (est +137.5), $1.75B 6-yrs (est +185), $3.75B 10-yrs (est +185) and $3B 30-yrs (est +200)- Reurters/IFR
08:59 am - Higher: The market has been boosted further following data with the 10-yr heading up to take the yield back to 3.65% with 3.575% in sight. The data were mixed, but generally bond friendly with initial jobless and continuing claims worse, with the jobless 4-wk average up to 468,750 from 457,000, while the cost of labor fell further while productivity slowed. The market will be keeping an ear cocked for any real news out of the daylong ECB press conference, but will not likely get much. The ongoing trouble out of Europe has helped the buck while the regional currency gets dinged to a 7 month low.
08:30 am - Bid: Bonds are bid with EuroLand problems aiding the bid while stocks slide. The market is aiming higher even as jobs data are expected to improve, with the turmoil in Europe leaving global bonds mixed to higher. The ECB and BOE left rates alone as expected and the Brits have halted their bond-buying "quantitative easing" program. The market will be eyeing the day's run of data, but will remain focused on tomorrow's big payrolls report. The market will be looking for general improvements on the day's data, with unit labor costs and factory orders falling, while jobless claims heading back near 450K. The curve has been holding near the recent steepest levels but has seen some minor unwinding with the
2-10-yr yield spread 281.2. The dollar has been pulling better with the index looking to move back over 79.70. The euro is being hit and holding near 1.3845 while dropping to get just 125.50 yen. The yen is regaining ground on the buck but has stalled near 90.60. Data due
initial jobless claims and productivity (8:30) with factory orders (10). Geithner will be testifying again in the House (10), while KC Fed's Hoenig speaks on the economic outlook (14).
07:08 am - Treasuries rose as the WSJ reported that the cost of insuring the debt of euro-zone members with large budget deficits against default rose Thursday. Greece, Portgual and Spain were targeted, with their 5-yr sovereign CDSs moving sharply lower. Equities are looking at a lower open. The dollar index gained while the euro and sterling dropped. Initial and Continuing Claims for 1/30 and 1/15, respectively, will be reported at 08:30 EST; consensus calls for 455K and 4581K, respectively. No auctions are scheduled until 2/09.
The 2-10 year yield spread is 282.
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i n100 e salutiamo gli amici rekkie 
