Week of March 4, 2012 thru March 10, 2012

Talk From The Trenches: MBS, Tsys Sales Halt; Buyers Advance

NEW YORK, Mar 2 (MNI) - Once the hedge funds stopping dumping Treasuries and agency mortgage-backed securities, both markets snapped back and a variety of real money accounts took advantage of the attractive yields resulting from this week's downtrade.

Fed's Bullard: Boosting Balance Sheet May Raise Infl Risks

(MNI) - St. Louis Federal Reserve Bank President James Bullard warned Friday about the inflationary risks of expanding the Fed's balance sheet and about basing monetary policy on what he considers faulty assumptions about the size of the "output gap" -- the difference between actual and potential GDP.

It will take "a long time" to recover from the bursting of the housing bubble and the Fed should not be trying to reflate that bubble, Bullard said in a speech prepared for delivery at Simon Fraser University in Vancouver, Canada.

Bullard, who is not a voting member of the Fed's policymaking Federal Open Market Committee this year, also questioned the credibility of calendarized commitments to zero interest rates.

Analysis: How to Forget Fin Crisis Wounds That Won't Heal

--Retransmitting Story Published 12:13 ET Friday

WASHINGTON (MNI) - As the years after the financial crisis accumulate it has become clear that it separated winners from losers by the millions, and many, perhaps most of the losers will not recover.

It's not pleasant to contemplate. Which is why rear-guard efforts to hold back time's power to erase both the bad memories and accustom us to ignoring the continuing damage may be bound to fail. Omar Khayyam was on to something with that Moving Finger, "having writ, moves on."

Witness Treasury Secretary Tim Geithner's plea in his morning Wall Street Journal op-ed, "Financial Crisis Amnesia." It may be a worthy but futile effort.

S&P: $4.00/Gallon Gasoline Will Not 'Derail' The US Economy

--$5.00/Gallon Gasoline Presents A Different Set Of Risks

WASHINGTON (MNI) - Ratings firm Standard & Poor's Friday said it believes the U.S. economy can weather the impact should the price of gasoline rise to $4.00 per gallon.

Many fear higher gas prices, pushed up by soaring oil prices, could have a contractionary effect on U.S. economic growth as consumers cut back on spending to compensate.

In a report, however, S&P said "We are inclined to conclude that $4.00 per gallon of gasoline will not derail the U.S.

TheFXSpot: LTRO2, Bernanke Rearview Now; Eyes On ECB, US Jobs

NEW YORK, Mar 2 (MNI) - With the European Central Bank's LTRO 2 and Federal Reserve Chairman Ben Bernanke's semi-annual testimony before Congress in the rearview mirror, market players shifted their focus to next week's beefy lineup of central bank decisions, economic data and potentially market moving events.

US News Events Calendar

--Meetings & Events of Interest to Subscribers



05-Mar 1345/0845 Treasury Assistant Secretary for Financial Markets Mary Miller speaks to the Institute of International Bankers Annual Washington Conference on "The State of Financial Regulatory Reform." She will be followed at 9:15 ET by Deputy Gov. of the Bank of Japan Kyohiko Nichimura and then at 14:30 ET by Acting Chairman of the Federal Deposit Insurance Corp.

US Mortgage Modifications Under Govt Hsg Program Slow In Jan

WASHINGTON (MNI) - The Obama administration Friday released data showing a drop in the number of borrowers that received assistance in January under the Making Home Affordable Program, the government's primary vehicle for helping struggling homeowners.

The statistics released by the U.S Treasury and the Department of Housing and Urban Development showed that 16,800 homeowners received a trail HAMP mortgage modification in January compared to 20,100 in December.

The report also revealed that permanent modifications under the HAMP program slowed as well, down to 18,000 homeowners in January versus 23,400 in December.

FXWRAP: Dlr Slightly Up, Euro Defensive As Week Winds Down

NEW YORK, March 2 (MNI) - The dollar was holding narrowly mixed against the euro and the yen in quiet afternoon dealings Friday, both pairs only minimally changed from the start of the U.S. session but the greenback holding onto solid gains scored overnight.

Euro-dollar was changing hands at $1.3200, the euro a tad below its early $1.3214 level of the day and locked in a narrow $1.3187-1.3235 U.S. hours range after sliding from atop $1.3300 overnight.

Dollar-yen meantime was changing hands at Y81.81, slightly above its Y81.50 early level of the day after traversing a Y81.44-82 range during the U.S. session.

US Debt Offering, Auction Calendar for Tsy and Agency Issues

March 2

Source: U.S. Treasury, Fannie Mae, Freddie Mac Amounts in billions of U.S.

NFIB's Dunkelberg:Feb Survey Anticipates Weak Job Creation No

WASHINGTON (MNI) - The following statement was issued Friday by the National Federation of Independent Business' Chief Economist William Dunkelberg:

"February was a 'break-even' month for job creators on Main Street. For small employers, the net change in employment per firm (seasonally adjusted) was 0.04. While this is better than January's net zero report, it's certainly nothing to get excited about.

"Seasonally adjusted, 14 percent of the owners added an average of 2.9 workers per firm over the past few months, and 12 percent reduced employment an average of 3.5 workers per firm. The remaining 74 percent of owners made no net change in employment.