Is that a Prius in my rear view mirror (were the Toyota's Super Bowl commercials a whale of a tale)? Time for extreme caution? Bonds are lower this morning as the Treasury will sell $81 billion in coupon debt this week in its quarterly refunding. Market participants continue to watch developments in the sovereign debt notably of Greece. The economic calendar is light this week but will include retail sales on Thursday. Fed Chairman Bernanke will testify on the Fed's exit strategy on Wednesday. Thirty-year bonds are down 7/32, yield 4.53%. Ten-year notes are down 7/32, yield 3.58%. Two-year notes are down 2/32, yield .79%.

Un-saintly government deficits/sovereign risk. An onsides kick will not solve these problems. Concerns regarding the surging debt levels of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) in Europe continues. Public workers in Greece are tentatively planning a private union worker strike Wednesday to oppose budget paring and wage reductions. Portugal is actually looking at spending increases. The European Union has done nothing more than endorse Greece's austerity plan.

My sovereign (US) better than your sovereign? The US deficit is not exactly saintly, right? “It makes a big difference if you are the reserve currency (US dollar)…It makes a big difference if you are the provider of the deepest and most predictable financial markets,” Pimco’s Mohamed A. El-Erian said at an press conference today during his trip to Sydney for a Reserve Bank of Australia symposium.

Treasury’s whale of a tale? While the Treasury is poised to sell $81 billion in coupon debt this week, much is being made of the Treasury's statement last week that debt sales should level out at current levels. Good news, but it should be taken in the context that the Treasury is expected to issue $2.43 trillion in debt this year, a 16% increase from last year’s record pace. Just so we don't worry, Treasury Secretary Tim said yesterday that the US "will never" lose its AAA credit rating. In other comforting words, he said the risk of a double-dip recession is "much lower" now.

Not to beat a dead colt. Is this the worst job hangover ever? Gluskin Sheff’s David Rosenberg wrote in his last Friday commentary, “Lunch with Dave” (he is actually trying to lose weight, many I am sure are hoping he “eats” less for “Breakfast” and “Lunch”): “While there will be many economists touting today’s report as some inflection point, and it could well be argued that we are entering some sort of healing phase in the jobs market just by mere virtue of inertia, the reality is that the level of employment today, at 129.5 million, is the exact same level it was in 1999, And, during this 11-year span of Japanese-like labour market stagnation, the working population has risen 29 million. Contemplate that for a moment; fully 29 million more people competing for the same number of jobs that existed more than a decade ago. That sounds like pretty deflationary stuff from our standpoint…Not only that, but consideration must be taken that in 2009, we had a zero policy rate, a $2.2 trillion Fed balance sheet and an epic 10% deficit-to-GDP ratio. You could not not asked for more government stimulus. Yet employment tumbled nearly 5 million in 2009.”

More..not to beat a dead colt. It is good news the household survey rose (although it did not recoup the previous month’s loss) and the decline in non-farm payrolls is slowing. David Rosenberg, also noted: "To put the -20k headline payroll result into perspective, history shows us that what is normal is that fully 24 months after a recession begins we are printing employment gains of 100k. In other words, labour market conditions can still be described as being somewhat abnormal and fundamentally soft even if the pace of deterioration has abated."

In other words, the “normal” consumer is not buying a Super Bowl ticket. Consumer credit fell $1.7 billion in December the Fed reported Friday. A decline of $10 billion was expected. The previous month was revised from a decline of $17.5 billion to a record decline of $21.8 billion. This is the eleventh consecutive decline (the longest since the series began in '68) and the fourteenth decline in the last fifteen months. Revolving debt, including credit cards, fell $8.5 billion, its fifteenth consecutive decline (the longest on record). Non-revolving debt, including auto loans rose $6.8 billion. The report underscores the continued deleveraging (although at a slower rate) of the consumer. This is good news for the consumers' debt heavy balance sheet but bad for an economy that is dependent on consumer spending to the tune of 70%+ of GDP.

Does Betty White have more game than Alan? Former Fed Chairman Alan Greenspan said that while the recession is "essentially over" the pace of growth is "going to be a slow, trudging thing.” He also said it is “very difficult” to see U.S. unemployment falling soon. Greenspan also believes small business taxes must be cut to create jobs. Our debt level threatens our status as economic power and we will no doubt need both a tax increase and benefit cuts to improve the deficit. Greenspan is concerned with the possible stock market decline as equity values affect economic activity.

Coming attractions. Fed President Dudley (voter) speaks today. Tuesday brings data o wholesale inventories.