At the risk of repeating myself, the bank capital raising has turned out to be entirely an equity story. BAC did it's sneaky equity raising and RF is allegedly next. Credit spreads in that sector are 20-30bps better on the news dragging the entire credit market tighter this morning.

Countering today's strength in bank spreads....I previously feared that this story may come back to haunt us....FASB is gaining momentum in their efforts to move previously off balance sheet obligations back on to the balance sheets. This does not bode well for the already burdened debt ratios of the banks.

The other big sector move this morning are commercial mortgage backed securities (aka CMBS). The Fed has announced that previously issued deals (i.e. the troubled ones) will now also be part of the TALF program; not surprisingly, spreads rallied dramatically.

You surely noticed the recent retail (relative) positive earnings surprises. Those spreads seem to have outperformed stocks; WMT and TGT are 10-15bps better in the last week.

The WSJ had an article speculating over the proper debt ratios for REITs. If lower ratios prevail, then REIT spreads will be much much tighter. Remember, REITs are one of the cheapest sectors in the credit markets.

More than once, I've noted mutual fund flows as one of the strong drivers of technical demand in the market. I've neglected to mention that the long dormant "high quality Asian buyer" has recently come back in to the market with a vengeance. Bonds that are single A rated or higher with ~5 year maturities are in the crosshairs of Asian central banks and pseudo-sovereign government agencies. I'm told the buying has been enormous in the last few weeks (perhaps the reason for the 4x ratio of dealer sales to dealer buys [TRACE data]). This may help the corresponding equities of the same name.