Need To Know News

Crude came under heavy selling pressure after a decent start to the session, losing almost 4%. Crude’s sell-off is likely the culmination of USD strength, expectations for a build in EIA Crude inventories, the resolution of supply disruptions in Iraq after the pipeline attack last week, and fears that demand may slip in the US.

Gasoline finished lower as well, dropping over 3% while Heating Oil managed to lose just 2%. Natural Gas, however, was well-bid gaining 2.45% to move back above the 10.00 handle.

TSY Secretary Paulson’s proposed plan to overhaul the US financial regulatory system sent major indices nearly 1% higher in the morning and boosted equities into the close

Financials were the biggest beneficiary, thanks to Paulson’s announcement and Citigroup’s decision to reshuffle its credit card and consumer banking branches. A stronger-than-expected reading on Chicago PMI, due to higher exports, also allayed fears that business investment was drying up.

Among the day’s worst performers were energy stocks — following the sell-off in Crude — and health care stocks, led lower by Merck and Schering-Plough after studies showed their cholesterol drugs were no more effective than generics.

Dow Futures finished up 23 to 12259. S&Ps closed at 1231.75, up 2.75. Nasdaq Futures added 4.75 to settle at 1784.75.

Metals were sent lower as Crude lost over 3.5% and USD strengthened. Gold lost over 1.5% to finish just above 920, making this the 3rd consecutive session Gold has finished lower.

Silver was lower by more than 3%, bringing its 2-day loss to more than 6%. Platinum dipped as low as 2,000 but failed to break through the level despite losing nearly 2%.

Copper was marginally lower in comparison to other metals losing only 0.33% to remain above its moving averages.

Bonds were firm today as Q1 drew to a close, rallying early on write-down concerns at UBS and Northern Rock and opening weakness in equities. Even as equities rebounded later in the morning on firmer Chicago-PMI and financials catching a bid, safe-haven flows held Treasury yields down.

The regulatory overhaul proposed today by TSY Secretary Hank Paulson yielded little market impact, as the plans are far-reaching and would take years — plus a lot of political compromise — to implement.

The 30yr is up 12 ticks, yielding 4.295%, while the 10yr is up 5 at 3.421% and the 2yr is 2 ticks higher to yield 1.606%. The 2-10yr spread is just over 181bps, marking a slightly steepened curve compared to Friday’s.

On the short end, the 4wk bill is down 9 ticks today to yield 1.18%. The 3-month lost 6 to yield 1.31% and the 6-month is down 3 at 1.48%. FED Fund futures are still about evenly split between a 25bp and 50bp rate cut on April 30.

Thomson Financial reports high-yield debt sales plummeted to $5.9bln in Q1 2008 after a reading of $38.4bln in Q1 2007. US asset-backed issuance followed a similar trajectory, plunging to 54.7bln in Q1 2008 from $323.3bln in Q1 2007.

Thomson also reports Citigroup is the largest underwriter by reported fees in Q1, though JPMorgan led US high-yield bond underwriting and asset-backed securities underwriting in Q1.

The downgrade reflects FGIC’s inability to raise shore-up capital, as well as the likelihood of the bond insurer breaching minimum capital requirements, according to Moody’s.

The Johnson Redbook Retail Sales Index for the 4th week of March will be released tomorrow at 8:55am EST.

The index rose 1.4% in the 3rd week of March after posting a 1.1% gain the prior week. Month-to-date, March was up 1.2% compared to March of last year. M-o-m was 1.8% above Feb.

March is a 5-week month on the retail calendar, ending April 5.

Sales performance in the 3rd week was somewhat mixed as cold weather and the early Easter holiday slowed seasonal business, but retailers were compensated by strength in consumables such as food and health and beauty aids.

Financials are leading equities higher in the final trading day of Q1 after TSY Secretary Paulson announced a proposed overhaul of the financial regulatory system. Citigroup’s decision to set up an independent credit card business and reorganize consumer banking along geographical lines has lifted the stock over 3%.

Energy stocks are taking a beating as Crude Oil plummeted over 4% to trade around $100/bbl. Health care stocks are also lower following weekend reports that cholesterol drugs from Merck and Schering-Plough performed as well as generics. Dow Futures are up 46 to 12282. S&Ps are up 7.25. Nasdaq Futures are up 10.75.