Global Fixed Income News

SNAPSHOT:
-dollar well supported, euro lower; Treasurys tick higher; stocks seen little changed; ICE Apr Brent down 66c at $125.32, Nymex Apr crude down 64c at $106.76; spot gold down 0.5% at $1,705.10.

-Watch for: Federal budget balance; employment trends index


MARKETS OUTLOOK:

FOREX:
The dollar was well supported as Friday's jobs report diminished expectations of further easing steps from the Federal Reserve but the ISDA's decision over Greek bonds kept the euro under pressure. At 0500 ET, the single currency was at $1.3114 against the greenback, from $1.3122 late Friday in New York, while the dollar was at Y82.20, from Y82.44.


BONDS:
Treasurys ticked higher in London trade, tracking a similar move in bunds as uncertainty surrounding the impact of the triggering of Greek CDS contracts has left investors cautious. Still, with $66 billion of supply this week, and an FOMC rates announcement Tuesday that's unlikely to announce further stimulus, the bearish trend in Treasurys looks set to continue, according to Nomura. "We view the fact that there are no scheduled events in the eurozone or significant periphery bond supply in the coming weeks as a catalyst that will re-focus U.S. markets back to U.S. fundamentals and Fed policy," Nomura said. At 0501 ET, June Treasurys were up at 130.290, and the 10-year cash yield was 2.01%.


EQUITIES:
Stock futures barely moved in London trade, with investors looking at the broader horizon of economic prospects around the globe while weighing up what the Greek credit event means following the announcement by the ISDA Friday.

Mark Grant at Southwest Securities, citing Bank of International Settlements data, noted there are about $75 billion worth of Greek default insurance contracts. That could make the after-effects of a CDS payout far more pernicious.

"This will give rise to all kinds of default clauses in all kinds of securitizations for Greece and then for the Greek banks who will also be declared in default soon," Grant said. "The fat lady has not yet begun to sing," he added.


COMMODITIES:
Oil futures are likely to be volatile going forward, said Global Risk Management. "Despite the whole debt debacle in western countries, global oil demand is already higher than in 2011 and 2010, 2009, 2008," it noted. "In combination with missing production, any drop in prices might be rather short-lived." The next technical resistance level for Brent is $127 a barrel, while the next support level is $118.5 a barrel, GRM said.

Gold investors appear to be facing mixed feelings over the yellow metals near-term prospects, although the case for higher prices this year remains intact, said UBS analyst Edel Tully. "Emotions are likely running high in the gold community at the moment--a mixture of disappointment, confusion and uncertainty about what is to come," she said. Still, the bank said it remains bullish on the market's outlook, even though it acknowledges the move to new highs will be bumpy. Tully said the biggest risk facing gold is better-than-expected U.S. data, especially if that leads to the Fed reassessing its policy on interest rates sooner than currently anticipated.

=======TODAY'S CALENDAR=======
ET      PERIOD
0700 FRA Jan OECD Composite Leading Indicators
1000 US  Feb Employment Trends Index
1400 US  Feb Treasury Statement of Receipts & Outlays
             of the US Govt Budget Balance
N/A          European finance ministers meet to approve
             Greece's second bailout deal
N/A  JPN Mar Bank of Japan Monetary Policy Meeting
==============================
TOP STORIES OF THE DAY:


New Greek Bond Prices Heavily Discounted, Signals Further Woes
New Greek government bond prices officially opened trading Monday at heavily discounted levels, showing investors have already taken a pessimistic view of the country's finances despite the recently agreed debt exchange.


Obama's Approval Rate Plunges
U.S. President Barack Obama's job approval rating plunges below 50%, weighed down by soaring gas prices, giving his political opponents what appears to be an opening in the November election, a new opinion poll shows.


PBOC Sees Room For Further RRR Cuts, In Theory
China's central bank governor says that in theory, there is "lots of room" to cut banks' reserve requirement ratio further, but such cuts will depend on factors such as the international balance of payments.


Moody's Says Greek Default Risk Remains High
Greece's debt exchange will allow it to avoid an immediate hard default, but the risk of the sovereign defaulting remains high, Moody's says.


Greek Restructuring A Relief, But No Panacea
Greece will reap fast relief from a historic EUR200 billion debt restructuring sealed Friday, but the default isn't likely to end the debt-strapped country's epic financial problems.


Germany Turns Up Pressure On ECB Over Inflation Fears
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China Trade Deficit Stoke Slowdown Fears
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BIS Report Logs Fall In Global FX Turnover
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Japan's Azumi Warns Of Action To Curb Yen
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Glencore, Cargill Looking At Viterra
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Pepsi Positions Top Officials
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Asahi Kasei To Buy Zoll Medical For $2.2B
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Apple Says IPad In Stores Friday, Shipment May Take 2 To 3 Weeks
Apple Inc. (AAPL) said Monday that shipments of its new iPad to customers who order it online may take two to three weeks but that the tablet would still be available in stores on Friday.


Caterpillar Seeks To Sell Up To CNY1.26 Bln Offshore Yuan Bond - Source
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WSJ: US Mortgage Deal Built On Tradeoffs
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WSJ: Planned MF Global Bonuses Draw More Fire From Senators
Two lawmakers prodded the bankruptcy trustee in charge of unwinding MF Global Holdings Ltd. to drop his plan to pay bonuses to top executives who were at the securities firm when it collapsed.