Market Wrap: The mortgage bond market spent most of the day fighting its way back from far lower levels while the stock market mostly fizzled instead of sizzled due to "mixed" corporate earnings reports and poor economic news. On the earnings front, IBM had a great report with a 26% jump in quarterly profits and a forecast of increased earnings for the rest of the year. This news was offset by poor results from Nokia, Pfizer, Sallie Mae, and Merrill Lynch. Disappointing economic news included Weekly Initial Jobless Claims rising by 17,000 to 372,000 vs. 375,000 expected while the four-week moving average moved to 376,000. These claims numbers are historically linked to recessionary levels. Also, the Philadelphia Fed Manufacturing Index showed its worst performance since the start of 2001 with a reading of -24.9 vs. -15.0 expected. Normally this is the type of poor economic news that would send bond prices much higher, but traders felt the news wasn't "bad enough" and they largely ignored it. Bonds also had to deal with comments made by noted inflation hawk Richard "Loose Lips" Fisher. The Dallas Fed President and voting FOMC member cut loose with a new warning "against inflating our way" out of the credit crisis and stated additional interest rate cuts "may just compound the problem." However, the bond market successfully contended with a supply issue today as the Fed auctioned $25 billion in 28-day credit through its Term Securities Lending Facility (TSLF). This Fed financing tool provides banks with an option to pledge their illiquid mortgage-backed securities as collateral in exchange for US Treasuries that can sold and used for new loan funding. The last TSLF auction of $50 billion weighed negatively on the bond market with a poor bid-to-cover ratio of 0.68 but today's was half the size and had a good bid-to-cover of 1.40 sending bonds higher. Our benchmark 5.5% FNMA coupon bond ended a volatile session with a remarkable 6bp gain to close at $99.81 after fighting back from an earlier intraday loss of 50bp. The major stock market indexes ended mostly flat but "mixed" with the Dow Jones Industrial Average gaining a measly point to close at 12,620 while the NASDAQ Composite Index eroded by 8 points to close at 2,341. The broader S&P 500 Index added a miniscule 0.85 of a point to close at 1,365.