Daily Market Commentary

Daily Market Commentary
Tuesday, March 9, 2010 at 8:00 a.m. CST

Market Indications

Other Market Indicators
2s/5s Tsy Spread	1.47	0.02	DJIA-30	10552.52	-13.68	Dollar Idx	80.53	0.00
2s/10s Tsy Spread	2.82	0.03	NASDAQ	2332.21	+5.86	CRB Idx	276.71	-0.22
2s/30s Tsy Spread	3.80	0.04	S&P-500	1138.50	-0.20

Today's Market Comments and Strategy

In spite of the $74 billion in auctioned securities coming to the market this week, 10-year U.S. Treasuries rose for the first time in three days. The speculation is that yields are too high after climbing almost a percentage point in the past year. Market participants are now wondering if economic reports will point toward an economic recovery that is struggling to get on track. At the same time, China’s indication that it wishes to keep the Yuan at a “reasonable and balanced level” is seen as an indication that they will continue to buy Treasuries.

The yields on Fannie Mae and Freddie Mac mortgage securities fell to the lowest level on record, relative to Treasuries. The difference between the 30-year MBS and the 10-year Treasury narrowed another two basis points to 63 basis points. The tightening of spreads continues to be fueled by the Fed’s purchase program. Through March 3, the Fed had purchased $1.22 trillion of the targeted $1.25 trillion to be purchased by March 31, 2010.

Equities are expected to open lower this morning as companies continue to report earnings. With no major economic releases scheduled for today, market participants will look to the one- and three-year Treasury auction results to guide today’s fixed-income activity.

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March 8 - 12, 2010: The Week Ahead
Sources: Bloomberg
economic calendar

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Select Probabilities based on the Futures
Probability of No Change (0-0.25%) Fed Funds on March 16, 2010	72%
Probability of No Change (0-0.25%) Fed Funds on April 28, 2010	76%

**All quoted rates are indications and are subject to change without notice.

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