$75 billion in treasuries next week, any buyers?

In a sign investors' loss of confidence in credit markets is deepening, rates on three-month Treasury bills fell to the lowest level since 1954. The Fed will auction $75 billion in Treasuries next week in exchange for an expanded array of collateral to ease the logjam in lending. Treasury prices are at unsustainable levels and we've completely backed away from the market.
Fed policy makers on March 18 cut their target lending rate by three-quarters of a percentage point to 2.25 percent, saying ``measures of inflation expectations have risen.'' The cut was smaller than the 1 percentage point traders had expected with 90 percent certainty before the meeting.

This week, a solid majority of panelists believe mortgage rates will rise over the next 35 to 45 days. About one-quarter think rates will fall, and the rest believe rates will remain relatively unchanged (plus or minus 2 basis points).

Treasury notes and Elevated inflation

Treasury 10-year notes rose, erasing half of yesterday's losses, on speculation the Federal Reserve will be less aggressive in cutting interest rates and focus on inflation. The difference in yields between two- and 10-year notes narrowed for a third day as traders pared bets the Fed will reduce the target lending rate by a half-percentage point at its April 30 meeting. Policy makers cut borrowing costs less than expected yesterday, saying inflation remained ``elevated.''

Futures on the Chicago Board of Trade show 70 percent odds the Fed will cut the 2.25 percent lending target by a half- percentage point at its meeting on April 30, compared with an 88 percent chance yesterday. The rest of the bets are for a quarter-point reduction.

Gold, used to hedge against rising prices, plunged the most since June 2006, falling 4.1 percent on the New York Mercantile Exchange. Crude oil for April delivery fell $2.04, or 1.9 percent, to $107.38 a barrel. Treasuries tumbled yesterday, pushing up two-year note yields by the most since 2001, after the Fed cut the target lending rate by three-quarters of a percentage point to 2.25 percent and said measures of inflation are ``elevated.''

SP 500 daily March 19

After the Fed. Market has been hit with Hammer of money.

Oil will fall a bit, gold will retrace down and we will consolidate here while the bear re assess where the next financial crisis will occur.

Bank One, Discover, and American Express are writing off debt at a faster rate than ever before. Consumer credit is going to take it on the head.