HIGH YIELD YESTERDAY CLOSES OUT UNCHANGED ON THE DAY, CONTINUING THE COMMON TREND OF BEING FAR MORE STABLE THAN THE EQUITY MARKET WHICH IS UP 1-2% ACROSS THE GLOBE ON POSITIVE CHINESE AND AUSTRALIAN GROWTH.  MARKETS IN EVERY ASSET CLASS ARE TRADING ON FAR LESS VOLUME.

Fixed Income Most Recent Axes:

RCN Cable, Firstlight Power, Brand Energy, Coleto Creek, Swift Transportation, Celanese

IRM 8.375, , MAS 6.125, BZH, HEIGR 6.125 16, THC 8%, DHI 2011, LEN, VWRINT, HAWKER, MTH, OC, PZZ

Treasury Rates Commentary

• It is hard to fathom Friday's vicious selloff, one of the largest of 2010 as Treasuries were once again firmly bid and now through last Thursday's closes across the curve. Treasuries were well bid overnight with the long end leading the market higher in price. The bid continued as the New York session opened with the large buying concentrated in  the intermediate sector and thus the early curve flattening was largely erased. After a slightly weaker Chicago Purchasing Manager at 56.7, expected 57.0 a much better than expected  consumer confidence 53.5 versus 50.7 expected gave Treasuries a small reprieve but this was short lived with the market once again finding a bid thereafter. With the large month end extensions ~.12 years flows in the late morning and throughout the afternoon were extremely heavy in the 10y and 30y with the long end gaining back its lead on the curve. Treasuries continued their bid into the New York close with benchmarks 1.6-7.6bps lower in yield, the 30y the best performer the 2y the worst.
• The Fed Minutes were released this afternoon with the headlines including: Fed officials saw risk August decision would send wrong signal, Fed should plan for more easing if needed and reinvesting in MBS might be desirable in the future.
• As we turn to September the economic data for the remainder of the week will focus employment with the  ADP report tomorrow and the labor departments report on Friday. The Fed will also be conducting its 6th purchase tomorrow in the 2/12-1/13 sector, and the Treasury will be auctioning $10Bln 10y TIPS Thursdays along with announcing next weeks 3y, 10y and 30y auction sizes.