The main market-driver Tuesday was a quarterly report from mortgage financier Fannie Mae. The U.S. government-sponsored enterprise was expected to report a net loss of 64 cents a share but lost $2.57 a share. Fannie Mae said it will cut its dividend and raise $6 billion in capital.

In Canada, March building permits declined 4.5% after increasing 0.8% in February, Statistics Canada said. Economists were expecting a 1.2% increase and the miss helped Canadian government bonds rally to session highs.

Yields on two-year Canadian government bonds are down 5.7 bps to 2.73%, five-year yields down 4.1 bps to 3.06%, 10-year yields down 2.3 bps to 3.60% and 30-year yields down 1.3 bps to 4.10%. The Canadian 10-year note is yielding 20.62 bps less than the U.S. 10-year note.

U.S. two-year yields are down 10.5 bps to 2.31%, five-year yields down 8.9 bps to 3.07%, 10-year yields down 5.9 bps to 3.81% and 30-year yields down 4.7 bps to 4.55%. The Eurodollar September 08 contract is up 2.0 ticks to 97.33. The 10/2 year spread widened 4.87 bps to 149.56. The yield curve is steeper with the difference in yield between the U.S. two-year and 10-year notes up 4.9 bps to 149.56 bps.

In Germany, returns on two-year German bonds are down 7.2 bps to 3.75%, five-year yields down 6.8 bps to 3.87%, 10-year yields down 4.7 bps to 4.11% and 30-year yields down 2.4 bps to 4.60%.

Yields on UK two-year bonds are down 9.0 bps to 4.41%, five-year yields down 9.3 bps to 4.36%, 10-year yields down 8.3 bps to 4.66% and 30-year yields down 5.4 bps to 4.49%.

U.S. equity market futures are lower with contracts on the Dow Jones Industrial Average down 72 points to 12895, the S&P 500 down 9 points to 1399 and the Nasdaq down 9 points to 1972.

European stock markets are also lower, with the Eurostoxx down 39.86 points to 3241.48, the UK FTSE 100 down 56.80 points to 6158.70 and the German DAX down 71.61 points to 6980.47.

Asian markets were higher, with the Japanese Nikkei closing up 282.40 points to 14049.26 and the Hang Seng Index up 78.18 points to 26262.13.

The euro is up 0.0050 to 1.5547 against the USD, up 0.0017 to 1.5733 against the Canadian dollar and lower by 0.32 at 162.19 against the yen.

Against the U.S. dollar, the Canadian dollar is up 0.0005 to 0.9881 and the Australian dollar is lower by 0.0012 to 0.9457.

The U.S. dollar is down 0.55 to 104.30 against the yen and the pound is up 0.0015 to 1.9735 USD.

The Canadian dollar is down 0.47 to 103.09 against the yen and lower by 0.0003 to 1.9971 against the pound sterling.

The U.S. Dollar Index was down 0.1650 to 73.0250.

WTI crude oil is up $0.34 to $120.31 while the front month gold contract at the Chicago Board of Trade is up $2.70 to $876.80.

All data taken at 9:18 a.m. EDT.

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