Our benchmark FNMA 6.0% mortgage bond had one of its strongest days in many months, notching a 103bp gain to close at $101.72. The catalyst for the surprising jump higher was news that giant bond fund firm PIMCO was buying mortgage backed securities, including nationally backed Fannie Mae and Freddie Mac issues, hand over fist. PIMCO's buying has raised its MBS inventory to its highest level since 2000. The day's only economic news surprised to the upside. September's Index of Leading Economic Indicators (LEI) rose by 0.3% vs. expectations for a fall of -0.3%. It was the first gain in the LEI since April and if the LEI can continue to post positive monthly numbers it could forecast a turning point in the economy six to nine months from now. This morning's credit market data is showing tight credit markets are beginning to ease as confidence is slowly being restored in the global financial system. Another foreign central bank joined the fight against the credit freeze with the South Korean government announcing they would guarantee up to $100 billion in foreign-currency loans while investing $30 billion in their banking sector. The overnight LIBOR rate dropped to 1.51% from 1.67% Friday to closely mirror the Fed Funds rate of 1.5%. Two weeks ago the overnight LIBOR reached a peak of 6.88%. The 3-month LIBOR continues to trend lower for the sixth consecutive day with a rate of 4.06% from Friday's level of 4.41%. The 'TED spread' fell to 3.25% from 3.63% Friday. The TED spread measures the difference between the 3-month LIBOR and the 3-month Treasury bill, and is a key measure of risk. The higher the spread, the more unwilling investors are to take risks. The spread was 1.04% about a month ago and hit a record high of 4.65% just over a week ago. The LIBOR/OIS spread, the spread between the dollar LIBOR and overnight index swap rates, measures how much cash is available for lending between banks and is also used for determining lending rates. The larger the spread, the less cash is available for lending between banks. The LIBOR-OIS spread has fallen to 2.93% from 3.28% on Friday. Fed Chairman Ben 'the Helicopter' Bernanke testified before the House Budget Committee on the U.S. economic recovery and stated Congress may need to stimulate the economy by either returning money to taxpayers or increasing government spending in order to avoid an extended economic slowdown. The stock market liked what Bernanke had to say, but investors gained greater confidence when they saw the credit markets thawing out. The Dow surged 413 points higher to close at 9,265. The broader S&P 500 Index added 44 points to finish at 985 and the NASDAQ Composite Index picked up 58 points to end at 1,770.