Equities rose and Treasuries backed up yesterday despite a backdrop of weak housing data, poor durable goods orders, the likelihood of another European bail-out, riots and war in the middle-east, and spreading radiation fears in Japan.

The benchmark 10-year note traded off yesterday's yield highs last night in below average volume. 10s are currently +6/32 at 101-31+ yielding 3.387% after briefly breaching 3.40% support yesterday afternoon. The FNCL 4.5 is +4/32 at 101-29. The secondary market current coupon is -1.5bps at 4.154%. Yield spreads are slightly wider on the open.

Rates are lower even as global equity markets gain ground. The NIKKEI was up 1.07%. The SHANGHAI closed 1.06% better. Ahead of the third revision to Q4 2010 GDP numbers, S&P fuures are +2.75 at 1308.25. The dollar index is +0.17% at 75.788. Front month NYMEX crude is basically flat at $105.63. And Gold is 0.43% higher at 1435.45.

Earlier today in France, Minneapolis Fed president Narayana Kocherlakota called current monetary policy "appropriately accommodative" and argued that a bursting asset price bubble, according to a model he described, would have no impact on unemployment in such an environment.  If monetary policy is not sufficiently accommodative, he warned, an asset bubble bursting could cause higher unemployment.

Kocherlakota, a voting member on the FOMC board, was speaking on bubbles and unemployment to the Idep-Institut D'Economie Publique conference in Paris.

Key Events Today:

8:30 - GDP growth is forecast to rise one-tenth to 2.9% in the third and final look at the fourth-quarter. New data suggests higher growth in inventories and faster growth in consumer spending, but neither is strong enough to bring GDP back to its first estimate of 3.2%.

"Although the international trade report indicates a larger trade gap and therefore slower economic growth, better-than-expected business investment and wholesale inventories point to a slight upward revision to 4Q10 estimate," said analysts at BBVA, predicting a 3% figure. 

9:15 - Dennis Lockhart, president of the Atlanta Fed, speaks on the economic outlook to the Bonita/Estero Market Pulse Conference in Ft. Myers, Florida.

9:55 - Consumer Sentiment isn't expected to recover from the sharp drop seen in the mid-March reading. The Reuter's/University of Michigan index fell to 68.2 from a late February level of 77.5 as gasoline prices shot past $100 per barrel. What has improved consumers position in the past two weeks? Not much. The index is anticipated to slide to 68.0, and that looks optimistic.

"Gasoline prices have edged a bit higher, and the Japanese earthquake has introduced new uncertainties and has hurt global stock markets," said economists at IHS Global Insight. We expect the final sentiment reading to dip a bit further, to 67.0 from the preliminary 68.2."

Note that in the mid-March reading, expectations drove the decline with a 13.3 point drop-off to 58.3, while the current conditions component fell 3.3 points to 83.6.

12:15 - Charles Plosser, president of the Philadelphia Fed, speaks on a framework for long-run monetary policy to the Shadow Open Market Committee in New York.