European bourses opened in positive territory, led by financials as Lloyds said its trading has been strong in the first 10 weeks of 2010. However, equities came under pressure later in the session following concerns regarding Greece not being able to get financial aid from the EU. Also adding to volatility is the fact that it is quadruple witching day today. German 10-year government bund futures gained strength into the European open on the back of ongoing concern regarding failure of Greece to get aid from the EU that led to widening of Greek/German 10-year government bond yield spread.

The S&P 500 closed a smidgen lower Thursday on speculation the Federal Reserve will  increase its discount rate which tempered the potential for gains spurred by further evidence that the economy is strengthening without stoking inflation. Bank of America and Schlumberger paced declines that sent financial and energy companies lower. In contrast Boeing, DuPont and 3M led gains that drove the Dow to an almost 18-month high after reports showed growth in Philadelphia manufacturing, a drop in jobless claims and no change in consumer prices. FedEx surged as its profit more than doubled and Nike rallied on higher-than-estimated earnings. So G5 near-zero rates continue to propel equity markets higher and help growth in the developing economies dramatically outstrip the G7. Meanwhile inflation is non-existent or at least very well behaved, so there is no pressure to tighten at the major central banks. With the unemployment rate at 9.7% my conviction is that the first Fed hike comes later rather than sooner.