Fixed Income Recap:

            High yield ended the week firm with equities performing well and lack of new issuance with inflows into high yield of $300+mm looking for places to put cash to work.  Futures giving back a little of last week’s gains on European bank concerns, primarily Ireland, and watching euro weaken as yen strengthens.  HY index up 2 points last week and 3 points off the weeks lows (closing the week at the highs $97.75 area).  We are opening down ¼ with S&P off -7.20.

Fixed Income Most Recent Axes:

BZH 6.5 & 8.125, IRM 8.375, HEIGR 16, THC 8%, DHI 2011, LEN, VWRINT, HAWKER, MTH, OC, PZZ

KIK, Sbarro, IAP Worldwide, CCS Medical, BMS, ASR, Riviera, CEDAR FAIR

Treasury Rates Commentary

• The Treasury market opened up the New York session slightly lower vs. yesterday's closes. Choppy price action leading into today's main event, non farm payrolls with investors squaring away positions ahead of the release. The employment report was significantly better than expected with only 54K jobs lost versus an expected 105K, and August was revised better by 77K, private sector jobs rose 67K, 27K higher than expected, the unemployment rate did creep up to 9.6%. Treasuries as would be expected quickly plunged on this news with the long end once again leading the market lower, 5s traded to 1.536%, 10s 2.768% and 30s 3.87%, selling was also aided by the large corporate calendar that is expected next week along with auction setups.  Treasuries came off their lows midmorning with dip buying and then from the worse than anticipated ISM non manufacturing at 51.5 expectations for 53.2.    Treasuries quickly settled down trading an extremely tight range throughout the remainder of the day ahead of the Labor day weekend. 10/30s traded a wide range today moving from their wides around 111bps shortly after the payrolls report back inside 108bps by the end of the day.
• At 3PM Treasuries were lower in price across the curve with benchmark yields ~1.7-7.6 higher, the 10y was the worst performer.
•  Next week the economic calendar will be extremely light, with many focusing on the $33Bln 3y notes, $21Bln 10y notes and $13Bln 30y bonds that the Treasury will be auctioning. The Fed will also conduct two more purchases in the 8/14-7/16 and 2/13-7/14 sectors.