Credit spreads gave up their early small gains after the housing starts/permits number and have settled about unchanged on the day.

The correlations between the credit markets and equities are starting to stretch (Z scores >2.5, R squareds ~.9).  If you believe credit leads equities, the S&P should be closer to ~1100.  If you believe equity leads credit spreads then the CDX index should be ~200 (vs it's current ~148).   

Supply seems to have been front end loaded this week ahead of the holiday.  There was ~$7B in issuance yesterday; for full details type NIM3 on your Bloomberg.  While it's still a bit early, I don't see much supply yet today.

The BIS released it's semi-annual derivatives survey which showed that global derivatives supply shrunk (H2 vs H1 '08) for the first time in the 10 years the survey has been in existence.  Volumes in single name CDS fell ~23% while market values actually increased by a whopping ~78%.  

What's left of Lehman Brothers has asked for a court investigation of Barclays saying that the brokerage unit was massively undervalued at the time of transaction.  While I have not read the entire request, superficially this seems to smack of hindsight.

You are well aware of the macro factors I usually cite as indicators of the (easing of the) credit crisis.  SeekingAlpha has done a great job this morning summing up their progress here.     

Over the last few days, I have noticed a few unique new bond funds popping up (here and here).  They are additional signs that the appetite for risk is back in the market as they are largely unconstrained by index or credit ratings guidelines.