Abdullah Karatash

In the absence of crazy headlines out of Japan or the Middle East (emphasis on headlines as opposed to real news), stocks rallied with the S&P stock index closing +1.5% higher.

Corporate credit spreads closed tighter but flows remain extremely light with investors seemingly not convinced that we are out of the woods yet.

Oil remains well bid closing above $102 a barrel as the regime of Yemen's President Ali Abdullah Saleh faces growing dissent as an influential general (who also happens to be the President's half brother) switched sides joining the opposition.

An air campaign against Libya's Colonel Qaddafi was initiated over the weekend although at its current rate it will have limited impact on facts on the ground.

The U.S. Treasury announced that they would begin selling the $140 billion in MBS (mortgage backed securities) they started to purchase in 2008 to support the housing market.

This announcement will not offset the $100 billion in Treasury bonds being purchased monthly by the Federal Reserve.

Over the weekend AT&T announced a $39 billion purchase of mobile operator T-Mobile from Deutsche Telekom adding fuel to today's stock rally.

The question is will service deteriorate for T-Mobile users in the New York area (AT&T service is notoriously bad in Manhattan).

Competitor Sprint saw its stock and bonds sell off as it has few alternatives to tie the knot with; 5 year Sprint CDS closed 50 bps wider at 300.

In new issues, medical test maker Quest Diagnostics sold $1.5 billion in debt in a four-part offering: $550 million 10 year at +140, $450 million 30 year at +150, $300 million of 5 year at +120, and $200 million of 3 year FRNs (floating rate notes).

Swedish bank Swedbank joined the covered bond party issuing $1 billion of 3 year FRNs at +45 and $1 billion of 5 year fixed at mid-swap +71.