A lot of people asking about the rally and steepening in fixed income. Certainly this story, which we sent out this morning at 7.00am London time, is being cited as is the report by S&P which suggests half of Europe's leveraged loans are in danger of default. Further reports of a US money market fund in trouble, trading below a $1!!! Also hearing of talk of structured deals being unwound, but no verification on that. If you add all this together then it explains to a degree what is going on. Certainly expect to hear more of these reports as the subprime/credit woes spread and effect other sectors. Looking at ITraxx this is not being reflected as the Crossover traded in to 541 about 20mins ago but has since widened back to around 550. Seems as though there is some de-leveraging and de-coupling this afternoon >> By Martin Z. BraunFeb. 13 (Bloomberg) -- A wave of bonds sold by U.S.municipal borrowers with rates set through periodic auctionsfailed to attract enough buyers in recent days as banksincluding Goldman Sachs Group Inc. and Citigroup Inc. that runthe bidding wouldn't commit their own capital to the debt.Rates on $100 million of bonds sold by the Port Authorityof New York and New Jersey, with bidding run by Goldman, soaredto 20 percent yesterday from 4.3 percent a week ago, accordingto data compiled by Bloomberg. Presbyterian Healthcare inAlbuquerque and New York state's Metropolitan TransportationAuthority also experienced failures, officials said.Investor demand for the securities has declined on waningconfidence in the credit strength of insurers backing the debt,and on reluctance by dealers to submit bids and risk ending upwith too many of the bonds. The failures in a market where localunsuccessful auctions of student loan-backed bonds last week.``It's the beginning of the end for the auction-ratemarket,'' said Matt Fabian, a senior analyst with Concord,Massachusetts-based Municipal Market Advisors. ``Banks havestopped supporting the market.''