Threading a needle with yarn

The MBA said purchases for the week ended Friday fell to the lowest level since May ’97. After buying $1T+ of MBS and instituting the home buying tax credit all we got was a temporary boost that now seems to be flaming out. The data is seasonally adjusted so its not just ‘that time of the year.’ Hopefully though as spring time hits and people realize that the housing stimulus will soon end, buying will pick up again. It is with this backdrop that Bernanke today will reiterate that rates will stay very low for a while. They must face the tail end of QE and its eventual reversal before they start adjusting rates. Bullard last night said they may hold off on moving rates thru ’10. Threading a needle with yarn is what they face. ABC confidence followed yesterday’s # by falling 1 pt to -50, the lowest since Nov. Portugal sold 5 yr notes with a bid to cover of 1.8, down from 2.02 2 weeks ago. Greece will be selling 10 yrs sometime in the next week.

II: Bulls 41.1 v 35.6 Bears 23.3 v 27.8 Correction 35.6 v 36.6

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