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Treasuries higher, while dollar and equities weak

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The markets have taken on a more defensive tone this morning with the U.S. Dollar sliding lower as Treasuries find buyers across the major maturities in what looks to be a cautious move ahead of tomorrow's address to the United Nations Security Council on the Iraq situation by Secretary of State Colin Powell.

The U.S. Dollar Index (dx00y) 99.48 -0.42% is weaker against a basket of major foreign currencies and looks to challenge last week's 52-week lows of 99.01, while the slip in the dollar has the February Gold futures contract (gc03g) 374.50 +0.99% jumping to a new contract high this morning, having traded as high as 376.50 overnight.

Selling in the shorter-dated Treasuries from yesterday is being reversed this morning with the 5-year Treasury (fv03h) 112'215 +0.21% seeing gains, while the benchmark 10-year Treasury (ty03h) 114'080 +0.24% also sees buying as investors look to seek out the perceived safety of Treasuries. Buying this morning in the 10- year Treasury has it yield ($TNX.X) back below the 4.0% yield level at 3.959%.

The above trading in the dollar, gold and Treasuries gives a defensive look to things, as does this morning's lower stock futures action.

S&P futures (sp03h) currently trade down 7.2 points at 851.30. NASDAQ futures (nd03h) are lower by 11.5 points at 974.50, while Dow futures (dj03h) edge down 52 points at 8,025.

Fair value for the S&P 500 today is $0.06. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.12 and set for program selling at $-2.22.

Telecom equipment stocks are looking at a lower trade today after Alcatel (NYSE:ALA) $7.00 fell 7% in European trading when it predicted a 25-30% sales decline in Q1, which was well below an anticipated 15% slowing by analysts. In mid-January, the French telecom equipment giant had given a much rosier outlook for its recently completed fourth-quarter, saying it was seeing "high twenty percent" growth that quarter. Shares of Alcatel are seeing its shares slip to $6.75, or 3.5% over the New York ECN in this morning's pre-market trade.

The new out of Alcatel has shares of Cisco Systems (NASDAQ:CSCO) $13.48 slipping 15-cents to $13.33 in pre-market action. After the close of trading today, analyst's look for Cisco to report earnings of $0.13 per share. A conference call will be held at 04:30 PM EST to discuss recent quarterly results. Investors can listen in by calling 1-800-369-1988.

Later this morning at 10:00 AM EST, December factory orders will be released. Economists are looking for orders rise 0.8%.

Jeff Bailey

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