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Treasurys Still the Story; Watch Spanish Home Prices

Savings Bonds
Peter Gridley | Taxi | Getty Images
Savings Bonds

Treasurys remain the big story: The yield on the U.S. 10-year note hit 2.3479 percent, the highest level since Oct. 28. The U.S. 30-year bond yield hit 3.4902 percent, the highest level since Sept. 2.

The dollar finally appears to be taking a break; gold down fractionally and European stocks are trading mostly higher.

Inflation alert — mixed messages: February Producer Price Index was in line with expectations, but New York manufacturing survey for March showed prices paid doubled to 50.6 — huh? doubled? — the highest level since June. The headline number for the New York survey continues to improve, to 20.2, the highest level since June 2010. Bottom line: wait for Philly Fed survey out at 10 a.m. ET.

Elsewhere:

1) Hot, hot cloud computing : Demandward priced 5.5 million shares at $16, well above the price talk of $12.50 to $14.50 a share. If the pattern holds, this could open with a two handle. Demandware raised $88 million in proceeds from its initial public offering and is the fifth cloud-computing based software company to go public since December.

2) The face of austerity: Spain home prices are now following the trajectory of the steep decline in prices we have seen in Ireland. Prices dropped 4.2 percent in the fourth quarter from the third quarter, and are down 21.7 percent from the market’s peak in the third quarter of 2007.

How far will prices drop? Ireland had a similar property boom, also fueled by foreign investment, but it is nearly two years ahead of Spain in its austerity program. House prices there fell 17.4 percent in January compared to the same period last year and are continuing to fall; they are now down 48 percent from their peak in 2007. Prices have not recorded a month-over-month gain since September 2007.

Other metrics in Ireland, such as retail sales, continue to be weak. Unemployment is at 15 percent and far higher for young people.

The Irish are leaving Ireland: Irish emigration rose to the highest level since the 19th century in the 12 months ending in April 2011, according to Irish Central, and will likely hit another record in 2012.

3) Greece's jobless rate rose to 20.7 percent in the fourth quarter of 2011 from 17.7 percent in the previous three-month period as economic activity slumped, the country's statistics service said on Thursday.

The auction for Greek credit default swaps will take place Monday, and we now have a good idea how much will likely be paid out: Of the $3.2 billion in notional value, the new bonds are being swapped at something like 23 percent of the face value of the old bonds, so the payout should be somewhere around $2.5 billion. Will there be any problems from counterparties who have to pay up? Should not be; the value is not high enough.

4) China: Some days the data are better, some days not. The Shanghai Composite Index fell 0.7 percent, to a three-week low, as foreign direct investment in China unexpectedly fell by 0.9 percent year-over-year, the fourth monthly decline.

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