FINANCIALS
The December Treasury Bonds and December Treasury Notes are trading better overnight. Some of this rally is due to flight-to-quality concerns following yesterday’s big drop in the stock market. Others are looking at the possibility of a bad unemployment report signaling that the Fed will have to cut interest rates to stimulate the economy. On the downside, the passage of the banking rescue plan by the House will likely put downside pressure on the market as this plan will blow out the federal budget deficit and cause rates to go up later.

EQUITIES
Global equity markets are trading better overnight. Wells Fargo announced a buyout of Wachovia. This action has brought stability to the market because it was announced before the House vote on the U.S. banking rescue plan. This also indicates that Wells is confident that the bill will pass today and is willing to take a calculated risk. At this time the charts indicate no sign of a bottom, however.

CURRENCIES
Trading in the currency market is mixed overnight with a slight bias to the upside. The currency futures have shown tremendous weakness this week as the Dollar has gained strength as a safe haven market. Banks started to hoard Dollars earlier in the week after the Dutch central bank bailed out banking giant Fortis, the Bank of England bailed out mortgage house Bradford and Bingley, and the French came to the aid of foreign bank Dexia. Yesterday the European Central Bank sent out a signal that interest rates would come down later in the year. This weakened the Euro. The British Pound is weak as the Bank of England is under pressure because of the U.K. housing slump. The direction of the Japanese Yen will depend on the U.S. stock market. A rally in stocks will send the Yen lower. Finally, rumors are circulating that the Bank of Canada is poised to lower rates at its next meeting in anticipation of a U.S. recession spreading north. This is attracting sellers to the Canadian Dollar.

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