Bonds benefited from a modest flight to safety bid in relatively light overnight trading flows. The 10-year Treasury traded within a range of 3.33% and 3.29% overnight, after finishing one basis point higher at 3.33% on Tuesday.  10s are currently +11/32 at 102-26+ yielding 3.288%. The FNCL 4.5 is +5/32 at 102-02.  And the 2s/10s curve is 3bps flatter at 264bps wide.

Equities are also relatively quiet amid a sea of global uncertainty in Europe, Japan, and the Middle-East. S&P 500 futures are 2.50  points lower at 1,285.75 and Dow futures are off by 22 points at 11,933.

While Portugal’s parliament readies for a vote on the Prime Minister’s austerity plan, investors have shifted concern from Japan back to the Eurozone debt crisis, according to BMO Capital Markets.

“A rejection of that plan could force an early election and the need for a bailout,” the bank said. “Portugal’s credit spreads continue to widen, with the 10-year bond yield hovering above an unsustainable 7.5%.”

They noted that Ireland, which has earlier accepted an EU bailout, saw both its 10- and 2-year bond yields spike above 10%.

Meanwhile, as Colonel Qaddafi continues to resist allied pressures in Libya ― he recently called them “a bunch of fascists” ―light crude oil has passed the $105 mark (up 0.54% overnight at $105.56 per barrel).

Yemen stands on the brink of civil war. Ali Abdullah Saleh, the president for the last 32 years, recently said he would depart in January after organizing parliamentary elections. But the concession ― his biggest yet ― may be too late.

“President Saleh faces a threat from a growing protest movement which in the past few days has been joined by generals, ambassadors, tribal leaders and other senior officials,” the BBC reported.

Global uncertainty is helping gold prices ― currently up 0.42% at $1,433.60 per ounce.

Stocks fell 1.65% in Japan, where officials in Tokyo recently announced that tap water is unfit for babies to drink due to radiation. The news has caused the U.S. Food and Drug Administration to announce restrictions on certain imports. The water reportedly has no immediate health impact to adults.

Shares in China finished 1.03% higher while those in Hong Kong fell 0.14%.

Just in, the MBA Mortgage Application index reported a 2.7% increase in the week ending March 18.

Refinancings and purchases each climbed 2.7% in the week, though purchases remain 15.3% lower than the same period one year ago.

The average 30-year fixed-rate mortgage increased one basis point to 4.80%

Key Events Today:

10:00 ― Can New Home Sales recover after declining to one of the lowest levels on record? That’s the question the market faces after the index dropped 12.6% in January to an annualized pace of 284,000. The consensus looks for a slight increase to 290k in February, but predictions are wide, ranging from 240k to 305k.

“Although housing demand remains weak ― witness the 10% slide in existing home sales in February ― and mortgage credit remains tight, demand is unlikely to go into reverse given improved job prospects and the best affordability in at least four decades,” said economists at BMO Capital Markets, predicting a 6% increase versus the 2% consensus.

The market will also look at number of unsold new homes, which fell to 188,000 units last month — the lowest since late 1967.

“The new home sales numbers are jumpy, subject to revisions, and not well estimated,” said economists at IHS Global Insight. “We recommend focusing on recent trends rather than on the latest monthly estimates. A three-month moving average shows new home sales still stuck at the bottom, with sales starting to pick up in the West, stuck at the bottom in the South, but still declining in the Northeast and Midwest.”

They added that poor housing permits figures indicate the sector “remains stuck at the bottom, and we project no change in new home sales this month.”

Economists at Nomura Global Economics are more optimistic with a forecast of +7.4%.

“That view is consistent with the two-point rise in the present single-family house sales component of the NAHB housing market index in February,” they added. The NAHB index rose to 17 from 15.

10:15 - The New York Federal Reserve will conduct and open market operation. An estimated $6.5 to $8.5 billion in Treasuries maturing between 05/15/2018 and 02/15/2021.

12:00 - Federal Reserve Chairman Ben Bernanke speaks on "Community Banking in a Period of Recovery and Change" before the Independent Community Bankers of America National Convention and Techworld,  Audience Q&A expected.