Sneaking Back: The market pulled better as the data was unwound with the trade report showing a tanking imports while initial jobless claims were in line. The jobless numbers are being given a little less gravity as the calculations are questioned. The 4-wk moving average is running 475.5K remaining on the high end. The data leaned on stocks, helping to lever bonds back some, but the issue of supply will hold advances in check.

Offered: The market has been pushing lower with the 10-yr ticking back to briefly break 3.745% with stocks pulling back from a sell-off while global bonds generally slide while inflation concerns stalk the periphery. Supply remains the key ingredient with the reopened $13 bln 30-yrs on deck and global corporate offerings continuing to come to the calendar. The 30-yr is a tricky offering and the auction will be approached with caution, but it will also be riding on the solid performance seen Wed on the at-record 10-yr outing. Data will be relevant as well, but because the jobless claims report will be muddies by things like "weather and processing" it will have to miss in a big way for the market to take it seriously. The curve has been slanting flatter with the 2-10-yr yield spread back to 281, but remains range-bound. The dollar has been pinging between 80.35 and 40 on the index while the euro was pulling higher, still shy of the 1.3680 barrier with an uptick in inflation expectations aiding the bid. The yen made a move for better levels but was flipped back to give up 90.70 per buck from 90.20 while making a steady trek worse toward 124 to the euro. Data jobless claims and trade balance (8:30) with the Fed flow of funds for Q409 (12) with NY's Dudley late (16:30). The key event will be the $13 bln 30-yrs.

The 10-yr Note is at its worst levels of the morning. Equities have recouped earlier losses and are looking at a flat to slightly negative open. The euro was flat vs the dollar. The yen was flat following news that Japan's economy grew less than initially estimated in 4Q09. Continuing Claims for 2/27 and Initial Claims for 3/06 are due at 08:30; consensus calls for 4500K and 460K. $13 bln in 30-yr Bonds will be auctioned. The 2-10-yr yield spread is 282 vs a yesterday afternoon level of 281.5.

Table of overnight activity in the financial markets.

Watching the Direct Bids: Treasuries were able to regain some ground following a darn-near stellar 10-yr reopening that went off at a lower than anticipated yield with a record bid-to-cover ratio and decent foreign entity participation. The market was wounded, however, and still wallowing in a boatload of global supply with tomorrow offering yet another record sized auction with the $13 bln reopened 30-yrs set to go (13). Trade is also battling the push higher in stocks as the world has decided that Greece has cleared some hurdles and the regions problems, even as they pop up like whack-a-moles, are carrying less sting (been-there-done-that trade). The hints at global growth are presenting a renewed "green shoots" environment, but that bubble may burst if retail sales fall off a cliff (Fri). Thurs' auction will be a tough test as, on the one hand, the long bond is offering up a mere 4.685% for 3 decades, but the highest yet, the auctions, across the curve, have been hit-or-miss at best and it seems few have been able to predict the outcomes. But funds like the long maturity and Japan is heading into fiscal year end and may want to pick up some duration. In other words, yet another crap-shoot. The market will be again watching the direct bids for size, which was a whopping 24.1% last time out. The curve worked back to the flatter track with the 2-10-yr yield spread running 281.5, likely to range into the data and auctions (assuming there are no further whispers concerning China on their CPI report). The dollar was up on the yen but offered on the euro with the index likely stuck in a fairly tight range as well. The day ahead has initial jobless claims and trade balance (8:30) with the Fed flow of funds for Q409 (12) with NY's Dudley late (16:30)

Supply once again is weighing on Treasuries as the 10-yr Note is near lows of the morning. Equities are looking at a flat to modestly higher open. The yen is ~0.05 away from its weakest levels of the morning, trading at ~90.43. Last Friday, the Nikkei newspaper said the BOJ could take additional monetary easing steps. The euro was slightly weaker vs the dollar while sterling continues to struggle. The Australian dollar was stronger vs the U.S. dollar. Wholesale inventories for January are due at 10:00; consensus calls for +0.2%. $25 bln in cash management bills and $21 bln in 10-yr Notes will be auctioned. The 2-10-yr yield spread is wider at 284 vs a yesterday afternoon level of 282.4.