CREDIT MARKETS

Treasuries:
Treasury prices extended losses Wednesday after the government met with lackluster demand at its auction of a record amount of five-year notes, as investors demand higher yields to absorb the growing amount of debt. Notes stayed lower after the Federal Reserve bought $7.5 billion in U.S. securities, the first operation since announcing last week it intended to buy up to $300 billion, and more than some traders had expected. The Treasury Department sold $34 billion in five-year notes to yield 1.849 percent, higher than traders had expected before the results were announced. Bidders offered $2.02 for every dollar sold, compared to an average of $2.17 at the last four auctions. Indirect bidders bought 30 percent of the monthly auction, the lowest since December. On Thursday, the Treasury will auction $24 billion in seven-year notes, only the second sale of the maturity in more than a decade. Both the five- and seven-year note amounts are $2 billion more than at the last sale. On the U.S. economic data front, orders for durable goods unexpectedly rose 3.4% in February. New homes nationwide rebounded by 4.7 percent in February after hitting a record low in the prior month. Sales of new homes rose to a seasonally adjusted annual rate of 337,000 last month, higher than the 323,000 that economists had predicted. Thursday’s releases will include weekly data on jobless claims and revisions to fourth-quarter growth numbers, which are expected to be the worst in many years.

Municipals:
California sold the biggest U.S. tax-exempt bond issue in almost five years to jump-start capital spending after tight credit and a record budget impasse kept the state out of the municipal market since June. California boosted its sale 64 percent to $6.54 billion yesterday, following a state advertising push that stretched to New York City for the first time and helped drive about $3.2 billion in purchases by individual investors. Stevens Point, Wisconsin, this month became one of the first municipal borrowers to use the new type of debt, known as “Build America Bonds,” which will be taxable for investors and offer a federal subsidy toward the city’s interest costs. Top-rated, 10-year general obligation bond yields rose one basis point, or 0.01 percentage point, to 3.49 percent. The final read on the MMD was as follows: on the front end yields were lower by 1-2 bpts, yields were unchanged in the middle of the curve and higher by 1-2 bpts on the long end.

Commentary/New Issues

Corporate:
$3.5 BLN, Wells Fargo & Co., Aaa/AAA, 2 part $1.75 BLN, 6/15/22, +3ML+22bp; $1.75 BLN, 2.125%, 6/15/12, 80.7bp
$750 MM, Deere Capital, 5.25%, 10/1/12, A2/A, +400bp

ABS:
(announced) $514 MM, CNH 2009-A, ABS

Agency:
Nothing

New Issues larger than $250mm. The fixed income offerings mentioned above are for informational purposes only. Toussaint Capital Partners, LLC, member NASD/SIPC, and/or its affiliates may be a participant in the offering mentioned and therefore offerings will be subject to availability.
All statistical data is sourced from Bloomberg Financial Markets.