THE BASIS POINT

Stocks, Rates Lower After Japan Atomic Threat Elevated

Stocks are down today (S&P 500 -12) and bonds are up (FNMA 30yr 4% coupon +53 basis points), which will push rates down if if the bond rally holds. Stocks were stuck in a flat trading range for the past week then today broke lower, so bonds are benefitting.

Part of the flight to safer bonds came after the threat level at Japan’s Fukushima nuclear plant was upgraded to Chernobyl levels. Also today’s $32b 3yr Treasury note auction was well-received by bond markets, which has added to bond buying sentiment.

In other news that didn’t have much influence on markets, February’s trade balance was down slightly at $45.8 billion. Imports were +2.7% since last month, a little higher than expected (+9.7% for the year), and Export Prices were up 1.5%.