03/29/2007 Q1 Global Liquidity Watch *

For the week, the Dow declined 1.0% (down 0.9% y-t-d) and the S&P500 1.1% (up 0.2% y-t-d).  The Transports fell 3.3%, reducing 2006 gains to 5.5%.  The Utilities were about unchanged (up 8.2% y-t-d).  The Morgan Stanley Cyclical index declined 1.0% (up 7.0% y-t-d), and the Morgan Stanley Consumer index fell 0.8% (up 1.0% y-t-d).  The small cap Russell 2000 declined 1.1% (up 1.7% y-t-d), and the S&P400 Mid-Cap index dipped 0.8% (up 5.5% y-t-d).  The NASDAQ100 lost 1.2% (up 0.9% y-t-d), and the Morgan Stanley High Tech index declined 0.8% (down 2.1% y-t-d).  The Semiconductors fell 2.9% (down 0.6% y-t-d).  The Street.com Internet Index declined 0.9% (unchanged y-t-d), and the NASDAQ Telecommunications index fell 1.3% (up 1.3% y-t-d).  The Biotechs gained 0.9%, increasing 2006 gains to 1.3%.  The Broker/Dealers dropped 2.9% (down 3.0% y-t-d), and the Banks fell 1.9% (down 3.1% y-t-d).  With Bullion up $6.30, the HUI Gold index dipped 0.9% (down 0.2% y-t-d). Two-year government yields declined 3 bps to 4.58%.  Five-year yields rose 2.5 bps to 4.54%, and 10-year Treasury yields added 3 bps to 4.65%.  Long-bond yields gained 4 bps to 4.84%.  The 2yr/10yr spread ended the week at a positive 7 bps.  The implied yield on 3-month December ’07 Eurodollars declined one basis point to 4.875%.  Benchmark Fannie Mae MBS yields increased 5 bps to 5.765%, this week underperforming Treasuries.  The spread on Fannie’s 5 1/4% 2016 note widened 2 to 37, and the spread on Freddie’s 5 1/2% 2016 note widened 2 to 37.  The 10-year dollar swap spread declined 0.2% to 52.80.  Corporate bond spreads were generally little changed, although junk spreads widened a couple bps.  March 28 – Bloomberg (William Selway and Jeremy R. Cooke):  “California is selling $4.77 billion of debt, the largest issue of U.S. municipal bonds so far this year, seizing upon tax-exempt borrowing rates that remain near their lowest point since the 1960s… It is the state’s third sale of more than $1 billion of bonds in two months, which may force the state to offer a higher yield to attract investors.” Investment grade issuers included Wal-Mart $2.5bn, Verizon $2.0bn, Chubb $1.0bn, Fifth Third Bank $750 million, Centurytel $750 million, Brown-Forman $400 million, Enbridge $400 million, and Security Capital $250 million. Junk issuers included Steel Dynamics $500 million, Service Corp Intl $400 million, El Paso Natural Gas $355 million, Macdermid $350 million, Denbury Resources $300 million, Advanced Medical Optics $250 million, and Sterling Chemical $150 million. The convert issuance boom this week included Kilroy Realty $400 million, RF Micro Devices $350 million, Equinix $250 million, St Mary Land & Exploration $250 million, Strategic Hotel $150 million, and Ambassador’s Intl $85 million. International issuers included BHP Billiton $2.25bn, Export Development Canada $1.0bn, Korea Development Bank $600 million, Caiua Serv Eletricidad $400 million, and Eurasia Capital $200 million. March 30 – Bloomberg (Lester Pimentel):  “Emerging-market bonds rose, pushing yield premiums over Treasuries to near a record low… The average spread, or extra yield, for developing countries’ bonds over U.S. Treasuries declined 3 basis points…to 1.65 percentage points, the narrowest since a record low reached Feb. 22…” Japanese 10-year “JGB” yields rose 4.5bps this week to 1.65%.  The Nikkei 225 declined 1.1% (up 0.4% y-t-d).  German 10-year bund yields jumped 5 bps to 4.05%.  Emerging debt markets were mixed, while equities mostly moved to the upside.  Brazil’s benchmark dollar bond yields declined 2 bps this week to a record low 5.68%.  Brazil’s Bovespa equities index added 0.6% (up 3.0% y-t-d).  The Mexican Bolsa rose 1.7% to a new record high (up 8.7% y-t-d).  Mexico’s 10-year $ yields gained 3 bps to 5.49%.  Russia’s RTS equities index rose 1.1% (up 0.7% y-t-d).  India’s Sensex equities index dropped 1.8% for the week (down 5.2% y-t-d).  China’s Shanghai Composite index gained 3.6% to a record high, increasing 2007 gains to 19.0%. Freddie Mac posted 30-year fixed mortgage rates were unchanged last week at 6.16% (down 19 bps y-o-y).  Fifteen-year fixed rates fell 4 bps to 5.86% (down 14bps y-o-y).  Meanwhile, one-year adjustable rates rose 3 bps to 5.43% (down 8bps y-o-y).  The Mortgage Bankers Association Purchase Applications Index was about unchanged this week.  Purchase Applications were up 2.0% from one year ago, with dollar volume rising 5.9%.  Refi applications dipped 0.5% for the week, although dollar volume was up 54% from a year earlier.  The average new Purchase mortgage increased to $243,400 (up 3.9% y-o-y), while the average ARM declined to $396,700 (up 14.3% y-o-y).  Bank Credit added $1.0bn (week of 3/14) to a record $8.327 TN.  For the week, Securities Credit declined $11.4bn.   Loans & Leases rose $12.5bn to $6.083 TN. C&I loans gained $9.0bn, and Real Estate loans added $3.9bn. Consumer loans gained $1.6bn, while Securities loans declined $3.1bn. Other loans gained $1.1bn.  On the liability side, (previous M3) Large Time Deposits rose $14.5bn.      M2 (narrow) “money” rose $9.1bn to a record $7.164 TN (week of 3/19).  Narrow “money” has expanded $121bn y-t-d, or 7.4% annualized, and $409bn, or 6.1%, over the past year.  For the week, Currency added $0.1 billion, while Demand & Checkable Deposits declined $17.9bn.  Savings Deposits surged $27.2bn, and Small Denominated Deposits gained $1.8bn.  Retail Money Fund assets dipped $2.1bn.    Total Money Market Fund Assets (from Invest. Co Inst) added $1.0bn last week to a record $2.432 TN.  Money Fund Assets have increased $159bn over the past 20 weeks (18.1% annualized) and $376 billion over 52 weeks, or 18.3%.      Total Commercial Paper surged $58 billion last week to a record $2.055 TN, with a y-t-d gain of $80.8 billion (16.4% annualized).  CP has increased $155 billion (21.1% annualized) over 20 weeks and $344 billion, or 20.1%, over the past 52 weeks.  Asset-backed Securities (ABS) issuance jumped to $22bn.  Year-to-date total ABS issuance of $180bn (tallied by JPMorgan) is now running only slightly behind the $184bn from comparable 2006.   At $92bn, y-t-d Home Equity ABS issuance is badly trailing last year’s $136bn.  Year-to-date US CDO issuance of $86 billion is running 32% ahead of comparable 2006.  Fed Foreign Holdings of Treasury, Agency Debt increased $3.9bn last week (ended 3/28) to a record $1.880 TN, with a y-t-d gain of $128bn (29.1% annualized).  “Custody” holdings have expanded at a 28% rate over 20 weeks and 18.1% y-o-y ($288bn).  Federal Reserve Credit last week added $1.0bn to $852.1bn (unchanged y-t-d).  Fed Credit was up $38bn y-o-y, or 4.7%.     International reserve assets (excluding gold) - as accumulated by Bloomberg’s Alex Tanzi – were up $811 billion y-o-y (19.1%) to a record $5.065 TN.  March 29 – Bloomberg (Maria Levitov):  “Russia’s foreign currency and gold reserves soared $10.9 billion, the biggest gain since the central bank began reporting weekly statistics in June 1998… The reserves, the world’s third largest, rose for a fourth consecutive week to a record $332.6 billion…” Currency Watch: The dollar index declined 0.4% to 82.66.  On the upside, the Thai baht gained 1.3%, the Israeli Shekel 0.8%, the Iceland Krona 0.8%, and the Canadian dollar 0.7%.  On the downside, the Colombian peso declined 1.5%, the South African rand 0.5%, and the Indian rupee 0.4%.  Commodities Watch March 26 – Bloomberg (Alaric Nightingale):  “Steel use will climb to a record 1.2 billion tons this year as Chinese consumption increases, the International Iron and Steel Institute said… Total consumption will rise 65 million tons, or 5.9%, this year and a further 6.1% in 2008…” For the week, Gold gained 1.0% to $663.95 and Silver 1.7% to $13.45.  Copper gained 2.5%.  May crude surged $3.59 to $65.87.  May Gasoline jumped 5.7% and May Natural Gas 4.4%.  For the week, the CRB index gained 1.9% (up 3.1% y-t-d), and the Goldman Sachs Commodities Index (GSCI) surged 4.2% (up 7.9% y-t-d).  Japan Watch: March 27 – Bloomberg (Mayumi Otsuma):  “Bank of Japan Governor Toshihiko Fukui said he’s monitoring land prices after a report showed gains of as much as 46% in parts of Tokyo last year.  ‘We aren’t yet in a situation in which land-price gains warrant concern of excessiveness, but we’d like to keep a close watch on them…Rising land prices won’t automatically prompt a rate increase.’  Commercial land prices in Japan’s three biggest cities rose 8.9% in 2006…” China Watch: March 26 – Market News International:  “Chinese retail sales rose 16.9% in February to 701.3 bln yuan, with consumer purchases boosted by the week-long New Year holiday…  Retail sales rose 12.7% in January….” March 29 – Bloomberg (Samuel Shen):  “China’s restaurant sales may surge 17% to about 1.2 trillion yuan ($155 billion) this year, driven by rising incomes, after rising 16% to 1 trillion yuan last year, according to the nation’s government.” March 26 – Bloomberg (Ian King and Janet Ong):  “Intel Corp. said it chose China for its first new computer-chip factory in 15 years, investing $2.5 billion to be closer to customers in a country that assembles about 50 percent of the world's personal computers.” March 26 – Bloomberg (Ting Ting Ng and Clare Cheung):  “Hong Kong’s exports unexpectedly accelerated in February...  Exports rose 11.6%...from a year earlier, after gaining 9.2% in January…” India Watch: March 30 – Bloomberg (Cherian Thomas):  “India’s central bank raised a key interest rate a month before its scheduled policy review because of a failure to bring down inflation from a near two-year high.  The Reserve Bank of India increased its overnight lending rate by a quarter percentage point today to a 4 1/2 year high of 7.75%.” Asia Boom Watch: March 27 – Bloomberg (Shamim Adam):  “Asia’s developing economies will grow 7.6% this year, faster than earlier forecast, as a pick-up in spending by consumers and companies cushions the impact of weaker exports, the Asian Development Bank said.  Growth in Asia excluding Japan and Australia in 2007 will exceed a September estimate of 7.1%...” March 28 – Bloomberg (Wahyudi Soeriaatmadja):  “Indonesia’s economy, the largest in Southeast Asia, may grow as much as 6.8% next year, Finance Minister Sri Mulyani Indrawati said.” Unbalanced Global Economy Watch: March 27 – Bloomberg (Marie-Louise Moller and Sheyam Ghieth):  “Dutch Finance Minister Wouter Bos comments… on the main risks to growth: ‘Well there are risks. The American dollar, the oil price, everybody acknowledges that those are risks. There’s one other factor that we have found differing opinions about and that is the question whether a possible crisis in the American housing and mortgage markets, whether that will actually have a negative impact on the European economy.” March 29 – Bloomberg (Brian Parkin):  “Germany’s unemployment rate fell to the lowest in almost six years in March as booming export growth encouraged companies to step up hiring and construction orders surged after the mildest winter on record.  The…jobless rate fell in March to 9.2% from 9.3%...” March 29 – Market News International:  “French unemployment fell more than expected  in February, enough to trim the ILO jobless rate to the lowest level since June 1983, according to preliminary…data released…by the national statistics institute Insee.” March 27 – Bloomberg (Francois de Beaupuy):  “French housing starts plunged 15.1% in the three months through February, the steepest drop since January 2001, suggesting a real estate boom is losing steam.” March 29 – Bloomberg (Simone Meier):  “The Swiss government raised its economic growth estimate for this year as companies boost spending and hiring to meet orders, encouraging consumer demand. Gross domestic product may rise 2 percent this year, the State Secretariat for Economic Affairs…said…an increase from the 1.7% growth predicted in December.” March 27 – Bloomberg (Jonas Bergman):  “Swedish household debt grew an annual 12% in February, slowing from the previous month… Household borrowing growth slowed from 13% in the same month a year earlier…” March 29 – Bloomberg (Jonas Bergman):  “Sweden’s National Institute of Economic Research revised up its forecasts for economic growth this year and next as the labor market strengthens and consumer spending growth accelerates.  The economy will expand 3.9% this year, compared with a December forecast of 3.6%...” March 29 – Bloomberg (Robin Wigglesworth):  “Norway’s jobless rate fell to 2.1% in March, the joint lowest since 1988, increasing concern that a labor shortage will push up wages and add to pressure on the central bank to raise borrowing costs.” Latin American Boom Watch: March 26 – Bloomberg (Alex Emery):  “Peruvian export growth quickened in February on surging sales of copper, zinc and fishmeal. The Andean country’s exports rose 23%...” Central Banker Watch: March 28 – Bloomberg (Matthew Brockett):  “Money-supply growth in the euro region unexpectedly accelerated to the fastest pace in 17 years in February, strengthening the case for the ECB to keep raising interest rates.  M3 money supply, which the ECB uses as a gauge of future inflation, rose 10% from a year earlier after increasing 9.9% in January…” Bubble Economy Watch: February Personal Income was up a stronger-than-expect 0.6%, with a y-o-y gain of 5.3%.  February Personal Spending was also up a stronger-than-expected 0.6%, with Spending up 5.6% y-o-y.  The March reading for the Chicago Purchasing Managers index was the highest (61.7) since April 2005.  February New Home Sales were at the lowest level since February 2000. March 28 – United Press International:  “The U.S. legal system imposes a cost of $865 billion a year on the U.S. economy, or $9,800 a family, a San Francisco ‘free-market’ think tank reports. The costs associated with civil lawsuits, and the fear of them, is 27 times more than the federal government spends on homeland security; 30 times what the National Institutes of Health dedicates to biomedical research; and 13 times the amount the U.S. education department spends to educate children, the Pacific Research Institute says.” March 27 – Bloomberg (Stefan Whitney):  “As many as 2.4 million Americans may lose their homes because of the collapse of subprime lenders, the Center for Responsible lending said in testimony… Mike Calhoun, President of the Durham, North Carolina-based nonprofit group, told the U.S. House Committee on Financial Services... ‘Homeownership has been thwarted rather than supported’ by subprime loans, Calhoun said.” March 28 – Bloomberg (Daniel Taub):  “The words ‘New Century’ used to flash several times a day on caller ID at Taleo Mexican Grill in Irvine, California, where diners wash down Salmon Veracruz with $7 hand-shaken margaritas. Reservations were often for 10 or more.  Not anymore, said Nic Villarreal, the owner of the restaurant, located two blocks from New Century Financial Corp.’s headquarters. ‘We don’t get any.’  In Irvine, where just nine months ago office vacancies approached a three-year low, home prices were at an all-time high, and unemployment was less than the national average, at just 3.6%, the unraveling subprime mortgage market is ruining the recent prosperity.  Hometown lenders including New Century and Ameriquest Mortgage Co. already have fired more than 3,000 people, house and condominium prices are down 17% since June and office vacancy rates are poised to double this year…” Financial Sphere Bubble Watch: March 30 – Bloomberg (Alison Vekshin):  “U.S. bank revenue from trading derivatives rose to a record $18.8 billion in 2006, driven by high client demand among hedge funds and other large institutional investors.  Revenue grew 31% from $14.4 billion in 2005, the previous record, the U.S. Office of the Comptroller of the Currency said… The notional value of credit derivatives, the fastest-growing derivatives market, increased 55 percent to $9.0 trillion in the fourth quarter…” March 30 – Dow Jones (Damian Paletta):  “The notional amount of derivatives held by federally insured U.S. banks was a record $131 trillion in the fourth quarter of 2006 in part because of a jump in the holdings of credit derivatives, the Office of the Comptroller of the Currency said… The $131 trillion figure is 30% higher than the fourth quarter of 2005… ‘The continued strong growth of credit derivatives reflects their importance as a source of managing and dispersing risk and we do not foresee any decline in the significance of this class of derivatives in future time periods,’ said Kathryn E. Dick, the OCC’s deputy comptroller for credit and market risk.” Mortgage Finance Bubble Watch: March 26 – American Banker (Cheyenne Hopkins):  “As problems in the subprime mortgage market have continued to surface, so has a significant spike in mortgage fraud.  The number of suspicious activity reports filed last year by banks, thrifts, and credit unions on suspected mortgage fraud rose 43% from a year earlier, to a record 37,313, according to figures from the Financial Crimes Enforcement Network…  The subject is a hot topic among industry representatives, who warn that the fraud extends beyond small-time crooks trying to get rich during the housing boom.  “Law enforcement is finding increasingly… [mortgage fraud] involves drug cartels, organized crime, and is even being used for terrorist finance purposes,’ Andrew Sandler, a partner at Skadden, Arps, Slate, Meagher & Flom LLP, said…” March 28 – Bloomberg (Mark Pittman):  “Subprime mortgage-backed securities from 2006 may be the ‘worst-performing in recent history,’ with delinquencies on the underlying debt ‘consistently higher’ than in the prior five years, S & P said.  About 13% of mortgages made last year to people who have poor or bad credit are delinquent, S&P analysts Michael Stock and Scott Mason said…with 6.65% of the total classified as ‘seriously delinquent,’ or more than 90 days late. Losses on bonds backed by the loans will be between 5.25% and 7.75%, compared with 5.5% in 2000… ‘It was the layering of risk,’ Stock said… ‘There is no equity in the home, no income verification and a first-time homebuyer.’” March 27 – Bloomberg (Gene Laverty):  “Ameriquest Mortgage Co. asked to be released from its Nascar contract as the lender sheds sports sponsorships to preserve cash.  The Irvine, California-based company wants to be released from the final two years of its three-year contract… Ameriquest, once the biggest provider of subprime loans, agreed March 19 to return the naming rights to Major League Baseball’s Texas Rangers Stadium…” MBS/ABS/CDO Watch: March 26 – Bloomberg (Darrell Hassler):  “Sales of bonds backed by mortgages, credit cards, student loans and other assets fell by 11% to $6.37 billion last week as new issues of home loans plunged.  Asset-backed securities sales dropped from $7.17 billion in the week ended March 16… New issues of mortgage-backed securities, consisting mainly of subprime loans for borrowers with poor credit or high debt, fell 46% to $3.21 billion.” March 27 – Bloomberg (Jody Shenn):  “Some collateralized debt obligations may face ‘severe’ ratings cuts because they hold subprime mortgage bonds, according to Moody’s… Subprime mortgage securities made up about 45 percent of the holdings of structured-finance CDOs, or those owning asset-backed debt, issued last year, Moody’s said… About $179 billion of structured-finance CDOs were created in 2006, according…to JPMorgan… The impact of downgrades on the underlying collateral would be ‘generally mild to moderate’ for those CDOs with up to average exposure ‘but could be severe for the most heavily exposed transactions…’” March 26 – Bloomberg (Mark Pittman):  “Bonds backed by automobile loans may be hurt by rising subprime mortgage defaults as people with poor credit struggle with their household debt, according to Standard & Poor’s.  Capital One Financial Corp., Wachovia Corp., Wells Fargo & Co., and other lenders have lent more funds to people with bad credit scores in the past few years to sustain growth, S&P said… The loans are also for longer terms, increasing the probability of default… About 68% of 2006 subprime auto loans were due in five years or more… ‘There could be some fallout from subprime in auto loans,’ [S&P analyst] Risi said… ‘We don’t have much data yet. We’re still in collection mode. It’s probably going to be hard to say for a while.’” Real Estate Bubbles Watch: March 29 – Market News International (Claudia Hirsch):  “Non-residential construction costs for materials and labor are rising amid robust U.S. building activity, according to general contractors and national builders. Construction executives said they fear a possible return of rapid price increases for materials like steel, copper and concrete. Strong growth in commercial and public-sector building activity is a main driver of prices, while global demand is also at play, they said. Labor availability remains tight as the non-residential construction trades chug along. Sluggish homebuilding markets provide little relief on materials prices or labor supply.” March 27 – Bloomberg (Michael B. Marois):  “About 200 residents of a trailer park and apartment complex outside Sacramento, California, are voting today on the fate of a $750 million school-bond measure.  The Folsom Cordova Unified School District is holding a special election for the bond after a November vote on the same measure was marred by faulty election maps. The borrowing was proposed in anticipation of development expected to bring 37,000 new homes to the area in the next two decades.” M&A and Private-Equity Bubble Watch: March 30 – New York Times (Peter Edmonston):  “After breaking the record for mergers and acquisitions last year, deal makers have started 2007 at an even faster pace.  With the first quarter drawing to a close, the value of corporate deals announced through Wednesday reached $1.08 trillion, according to Thomson Financial. That is 24% more than the value of deals in the first quarter of 2006. The tempo has slowed from last year’s fourth quarter, when $1.2 trillion in transactions were announced… Many of the conditions favorable to deals remain in place, including an accommodating credit market and an abundance of well-financed private equity firms.  ‘We are still in an accelerating mode,’ said Robert Filek, a partner…at PricewaterhouseCoopers. He added that deals this year could break the record set in 2006, when there were about $3.8 trillion in announced transactions — up 38% from 2005.” Energy Boom and Crude Liquidity Watch: March 28 – Bloomberg (Will McSheehy):  “Companies from Gulf Arab states, led by issuers in the United Arab Emirates and Saudi Arabia, will almost double sales of bonds this year, according to Moody’s… Gulf companies will sell about $30 billion of bonds in 2007, to finance expansion and tap local and European demand for debt, Moody’s said…” Fiscal Watch: March 29 – Bloomberg (William Selway):  “Florida’s tax receipts are falling for the first time since 1975 as a slump in construction and home sales dims the economy of the sunshine State.  ‘We’ve been on a pretty steep incline,’ said Florida State Senate Majority Leader Daniel Webster… ‘There was always going to be an end to that, and it’s flattened out.’  States from New Jersey to California are getting pinched, just a year after many enacted the biggest spending increases in almost two decades. They’re drawing down $16.6 billion from reserves this year – 29% of their total savings… ‘A lot of states are starting to worry,’ said Iris Lav, who follows state budgets for the Center on Budget and Policy Priorities… ‘We have yet to see the effects of the bursting of the property bubble.’” Q1 Global Liquidity Watch: March 30 – Reuters:  “Global debt issuance rose 3% to $1.73 trillion in the first quarter, led by a surge in corporate bond sales as companies sought financing for mergers and acquisitions, according to data from Dealogic.  Global issuance of corporate bonds was up 22 percent to a record $700.54 billion in the first quarter, including $626.3 billion of high-grade debt and $74.3 billion of junk-rated debt, Dealogic reported.” March 29 – Financial Times (Lina Saigol and James Politi):  “Global mergers and acquisitions topped $1,000bn in the first three months of this year, the busiest first quarter on record.  The boom, driven by buy-out fever, ambitious chief executives, and cheap financing saw the volume of deals reach $1,130bn in the first quarter, a rise of 14% on the same period last year, according to Dealogic the data provider.” March 30 – Reuters (Jessica Hall):  “U.S. merger activity in the first quarter surged 21% in value from a year ago as private equity firms and corporate buyers shrugged off stock market volatility and poured money into sectors such as energy, real estate and financial institutions.  Globally, announced mergers reached about $1.2 trillion for the first three months, the strongest first quarter ever and only the third time quarterly M&A volume has exceeded $1 trillion, according to…Dealogic.  First-quarter merger volume in the U.S. totaled $428.7 billion, compared with $352.1 billion a year earlier, Dealogic said.” March 30 – Reuters (Jonathan Stempel):  “U.S. high-grade and junk bond issuance rose in the first quarter compared to the same period last year, driven by financing for mergers and leveraged buyouts, Thomson Financial said on Friday.  U.S. companies sold $38.6 billion of high-yield bonds in the first quarter, up from $29 billion for the same period last year… ‘There is a substantial amount of demand for high-yield product,’ said Jim Merli, global head of fixed-income at Lehman Brothers… ‘The LBO calendar is fueling a significant portion of issuance.’  High-grade bond sales totaled $272.5 billion in the first quarter, up from $241.8 billion for the first quarter last year… ‘March is one of the busiest months we’ve had in investment-grade,’ Merli said. ‘M&A activity, the need to fund capital expenditures and historically attractive funding levels should continue to lead to a relatively high level of primary market activity.’  U.S. high-grade corporate bond sales hit a monthly record in March at $98.6 billion… The financial sector accounted for about 72 percent of the total, much of it in floating-rate notes… March 30 – Reuters:  “Federal agency debt issuance grew to $214.7 billion in the first quarter from $171.7 billion in the same quarter last year, boosted by new short-term and callable supply, Thomson Financial said on Friday.” March 30 (Reuters) - U.S. mortgage-backed securities issuance totaled $247.7 billion in the first quarter of 2007, down from $261.4 billion in the same period a year earlier, Thomson Financial said on Friday.” March 30 – Reuters (Brian Kelleher):  “Asia Pacific equity and merger deals had another bumper quarter as new listings from China and mega acquisitions in India set the pace for what is likely to be another record year of regional investment banking activity.  Investment banking fees for the region, excluding Japan, rose to $1.1 billion, up 8 percent from the first quarter of 2006 as M&A activity jumped 42 percent, according to…Dealogic.  Last year was a record for investment banking activity in the region…but bankers and lawyers said 2007 may be even better. ‘The record setting activity of last year shows no signs of abating,’ said Roger Denny, partner and head of M&A, Asia for law firm Clifford Chance. ‘What we’ve been working on and what’s in the pipeline suggests it could be another record year.’ M&A volume hit $105 billion, a record for the first quarter, as India took centre stage.”