Bailout police are circling

The bailout police are circling to once and for all try to stem the spread of busted countries. European debt and stocks are rallying after Japan’s interest announced yesterday and today’s story that the EU are discussing putting together a package for Portugal and will possibly buy Greek debt in the secondary market in order to lower their financing costs. Portugal successfully sold 3 yr and 10 yr paper with yields higher than the previous one’s but not as bad as feared with the 10 yr in particular priced at 6.72%, below the 7% pain threshold. CDS in all the strained nations in Europe are trading tighter. In Asia, as expected, Thailand raised interest rates as “inflationary pressure going forward is still expected to increase as the economy continues to grow and oil and commodity prices are on an uptrend.” I believe that will be the trend of 2011.

ABC confidence rose 5 pts to -40, the highest since Apr ’08 and is 6 pts above the one yr average. Gains were seen in all 3 categories, State of Economy, Personal Finances and Buying Climate and likely is responding to the continued improvement in the labor market. Mortgage apps rose 2.2% but the components were mixed as purchases fell by 3.7% while refi’s were up by 4.9% as mortgage rates held steady at an average of 4.78%. Equity bullishness grew again according to II. Bulls rose to 57.3 from 54.5 to just shy of the highest since Dec ’08 while Bears fell to 19.1 from 20.5.

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