Stocks are higher, the U.S. dollar lower and Treasuries relatively unchanged. The Dow Jones industrial average is up 95 points to 8112, the S&P 500 is up 11 points to 866 and the Nasdaq is up 21 points to 1695. In Canada, the S&P/TSX composite index is up 49 points to 9397.

European stock markets are also higher, with the Stoxx 50 up 17 points to 1984, the UK FTSE 100 up 60 points to 4156 and the German DAX up 56 points to 4664.

Markets generally disregarded first-quarter U.S. GDP figures, which were much worse than consensus forecasts on the back of plummeting private investment, and as trade levels continued to shrink. Advance GDP for the first quarter of 2009 contracted 6.1% against expectations of a 4.7% decline.

"The overall take is that Q1 was a capitulative quarter for business even as consumer [spending] was a bit stronger," said David Ader, U.S. government bond strategist at RBS Greenwich Capital. "As weak as the headline was this is 'old' news of sort and the inventory contribution to the weakness won't look as bad going forward."

Concerns over the swine flu continue to make headlines. The media are reporting that a 23-month old child from Texas is the first person who died of the swine flu in the U.S. The World Health Organization is also holding another emergency meeting and there is some speculation it could raise the alert level.

The major event of the day is the FOMC rate decision at 2:15 p.m. EDT. With interest rates essentially at zero, most strategists agree that the Fed won't be making any major announcements.

At the most recent meeting on March 18, the Fed announced it was expanding its balance sheet by $1.2 trillion. The announcement included the purchase of $300 billion in longer-term Treasury securities. Following the announcement, the U.S. dollar index dropped 3.6%.

Some strategists suggest that the Fed could expand those purchases but most believe they are complete.

"I think we have seen some relative stability since the Fed's last meeting," said Jamie Coleman, currency strategist at Forexlive.com. "I think that means there is very low risk that the Fed makes any major changes."

U.S. two-year yields are down 0.8 bps to 0.94%, with five-year yields up 1.0 bps to 1.95%, 10-year yields flat at 3.00% and 30-year yields down 1.3 bps to 3.94%. The Eurodollar September 09 contract is up 2.5 ticks to 98.97. The yield curve is steeper, with the 10/2-year spread up 0.2 bps to 210.77 bps.

Yields on two-year Canadian government notes are flat at 0.99%, with five-year yields up 1.2 bps to 1.99%, 10-year yields up 0.8 bps to 3.06% and 30-year yields flat at 3.79%. The September 09 BAX contract is up 2.0 ticks to 99.59.

In Germany, returns on two-year German notes are flat at 1.33%, with five-year yields up 0.7 bps to 2.35%, 10-year yields up 2.2 bps to 3.16% and 30-year yields flat at 3.92%.

Yields on UK two-year notes are down 2.3 bps to 1.08%, with five-year yields down 6.4 bps to 2.32%, 10-year yields up 0.6 bps to 3.46% and 30-year yields up 3.1 bps to 4.31%.

The Canadian dollar is up 0.0096 to 0.8299 against the U.S. dollar (1.2049 USD/CAD) and up 1.29 to 80.41 against the yen.

The U.S. dollar is up 0.45 to 96.89 against the yen and the Dollar Index is down 0.486 to 84.672.

The euro is up 0.0091 to 1.3240 against the U.S. dollar, down 0.0081 to 1.5953 against the Canadian dollar, up 0.0006 to 0.8992 against the pound sterling and is higher by 1.47 to 128.27 against the yen.

The pound sterling is up 0.0091 to 1.4725 against the U.S. dollar and down 0.0099 to 1.7741 against the Canadian dollar.

WTI crude oil is up $0.61 to $50.53. The front month gold contract at the Chicago Board of Trade is up $6.90 to $900.10 per ounce.

All data taken at 9:48 a.m. EDT.

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, This email address is being protected from spam bots, you need Javascript enabled to view it

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