Market Analysis

US Treasury bonds are slightly worse this morning and mortgage bonds are flat.  Stocks are up in response to better than expected sales reported by Alcoa yesterday afternoon and positive comments from Fitch regarding the progress they believe Europe is making to deal with the structural imbalances which created their debt problems.  Fitch indicated that it may downgrade Italy which would not come as a surprise and that they would release updating ratings for other European countries they have placed on a downgrade watch by the end of this month.  Downgrades in Europe in the short term are most likely already built into investor expectations.