The best way of reading the interest rate forecasts from the 10 voting members of the FOMC today is to know that the doves will want them low for longer and the hawks will be quicker to hike rates. Of the 10, 8 are doves, thus a blended forecast of where the fed funds will be is as low as possible for as long as possible. The statement will be out at 12:30pm with the press conference to follow at 2:15pm. With the recent tick up in Treasury yields, the avg 30 yr mortgage rate rose 5 bps to 4.11% and refi apps fell 5.2% and purchases were down by 5.4%. In Europe, the Jan German IFO rose to an 5 month high led by the Expectations component as Current Conditions were down slightly. On Greece, unnamed ECB officials said they are against taking losses on their Greek bond holdings as they feel they didn’t buy these bonds as investments but as a conduit for their monetary policy. Either way, the ECB is a Greek bondholder and why should they get special treatment? Portugal’s 10 yr yield is back to the highs and Italian yields are up for a 2nd day. The UK economy officially contracted in Q4 from Q3 by .2%. In Asia, the Bank of Thailand cut interest rates as expected and joins the Philippines, Indonesia, Australia and Brazil as those that have recently cut rates. The yen is falling to a 4 1/2 week low vs the US$ after they reported a larger trade deficit than estimated. II: Bulls 50, unch. Bears 28.7 v 29.8, lowest since mid Aug.

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