Today’s $21 billion auction of 10 year notes saw yields bounce around from 2.61% to 2.66%, finally settling at 2.64%.  Now we will see how trading is for existing supply.  Some traders are expecting a rally based on last week’s European Central Bank announcement of negative rates and the arbitrage between other 10 year instruments such as German 10 year bonds yielding 1.40%.  Markets are pricing in deflation across the EuroZone as the Spanish bond yields recently matched those of the US, a huge surprise given Spain’s recent troubles as yields hit 8.00% in 2012.  However, markets seem to anticipate “normal” inflation to return to the US much sooner Europe.  CMBS is still very aggressive as loans price tighter to break even spreads with more interest only and other “bells and whistles”.  All-in coupons are being priced at 4.50% or below…..stay tuned….. David R. Pascale, Jr