Short rates continue to creep higher

US$ 3 mo LIBOR continues its march higher, however glacial, to .284%, the highest since mid Oct ’09. The move follows the rise in the discount rate one month ago and expectations it will soon go up again, the 1 month bills the Treasury has been selling to rebuild its supplemental financing program, the coming end to QE and the growing belief that the fed funds rate will be moving slightly higher over the next 6 months. Greek bonds and CDS are trading up after comments from the Greece finance minister that said even with a weaker than expected economy in ’10, their budget deficit cutting plans are still on track. Greek stocks are also bouncing but the euro is back below 1.35 vs the US$ on continued uncertainty with where Germany stands on a credit backstop or loan plan for Greece. As we approach the spring selling season, end to QE and upcoming expiration of the home buying tax credit, Feb Existing Home Sales are out today.

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