Prices of Treasury coupon securities have slumped in overnight trading and have partially reversed some of the prices gains and curve flattening which transpired in Friday’s session. The Nikkei in Japan declined but most other global equity markets are posting sharp gains and pre market trading indicates that US markets will open with roust gains.

I am always a better bear regarding equities markets and fared much better the last several years as markets ate their young. Currently, I have very modest holdings of mostly defensive equities and have been too quick too hedge even those core holdings. I am not about to plow in a big wad of cash at this juncture but must admit that the equity market move is substantial and impressive.

I guess this personal digression and mea culpa is prompted by a perusal of the overnight economic data. When we were in the throes of the bear market all of the small items of news which I culled from the overnight reports validated a bearish stance and today it it is striking in that just the opposite is happening as the preponderance of reports are less gloomy and sometimes upbeat.

I would start with former Fed Chairman Greenspan who provided bulls everywhere with sustenance, succor and sanctuary with his comments about the end of the recession. (I guess it does not matter that his easy policies and blithe response to the real estate bubble got us into the current mess.)

In China the economy continues to respond positively to stimulus as manufacturing as measure by a purchasing managers index expended to 52.8 from 51.8 in July versus June.

HSBC (NYSE: ) reported unexpectedly strong profits.

Regarding Japanese equities I mentioned small losses by the Nikkei but the Topix has achieved its longest winning streak since 1988.

European manufacturing as measured by the purchasing managers index rose to 43.6 from 42.6 and is at its highest level in eleven months.

Manufacturing in UK expanded for the first time since March 2008.

I may be slow witted at times and married to a bearish world view but it is hard to ignore the reality that signs of improvement abound. I still believe,though, that this recession was a unique economic calamity and that recovery will not be quick and it will not be easy. The financial positions of households and businesses have been strafed and decimated, and repair and a return to the status quo ante will be a long and painful adjustment.

While that takes place I ill be happy to reinvest my dividends in stocks such a Con Ed (NYSE:  ) and Verizon (NYSE: ). It may be boring but I sleep better at night.

The yield on the 2 year note has increased a basis point to 1.12 percent. The yield on the 3 year note has climbed 2 basis points to 1.61 percent. The yield on the 5 year note has jumped 5 basis points to 2.57 percent. The yield on the 7year note soared 6 basis points to 3.20 percent. The yield on the 10 year note also climbed 6 basis points and rests at 3.54 percent. The yield on the Long Bond has climbed 5 basis points to 4.35 percent.

The 2year/10 year spread has widened 4 basis  points to 242 basis points.

IG 12 and Some CDS

Libor