The activity in the Treasury market over the last couple of days has been eye opening to say the least. Bonds have been absolutely crushed, and the yield on the 10-Year note has exploded through the 3% level to 3.27%. On a very short-term basis, this move looks to be too much too soon, and Treasuries appear to be oversold. On a longer-term basis, this market may implode if credit and inflation concerns creep into the picture down the road -- not an unlikely outcome.

Observers are pointing to a number of factors that are causing yields to rise. Some market participants are viewing this development as an indicator that investors are beginning to price in more robust growth going into 2011. This would be a good thing. If this is in fact the case, a major stock market move could occur in very short order.

This post is quite short, yet very important. For the first time, the Fed is conducting "Reverse repos."

Why is this so significant? For the past year the Fed has been doing "repos." A repo is when the Fed steps in and buys Treasury securities. The effect is to create a credit on bank balance sheets and consequently give them more lending power.

Pequot Capital Management is coming to an end, closing the book on two decades of hedge fund history. Arthur Samberg, at one point the biggest hedge fund manager in the world, is closing the company as a result of a Securities and Exchange Commission (SEC) insider trading investigation.

At its peak in 2001, Pequot had $15 million in assets under management. By November 2008, it was only $4.3 billion ... and $3.47 billion as of May 15, 2009, according to a regulatory filing.

Disgruntled former Enron shareholders looking to recoup some of their losses have been dealt a major blow by the Supreme Court, which declined to review their lawsuit against the investment banks that helped Enron CFO Andrew Fastow enter into sham transactions designed to hide debt and inflate the company's profits.

The Supreme Court's decision not to hear the case is, frankly, insane. Major investment banks entered into deals with Enron that clearly served no economic purpose other than to inflate the company's financial statements.

For instance, some of the transactions involved things like selling a barge to a consortium of investors and then buying it back for more money during the next quarter. What could these sophisticated investment bankers possibly have thought was going on?

In effect, the investment banks served as maitre d's renting out hotel rooms in 15-minute slots to leggy blondes who signed with names like "Crystal Divinity" and men who signed "John Doe." And now they're trying to claim that they didn't know there was any kind of scheme.

These investment banks willingly helped Enron conspire to defraud investors, and now they're being shielded from civil liability for the scheme that they were an integral part of. That's wrong.

The sub-prime mortgage market is in shambles. But Wall Street, making every effort to rid itself of risky mortgage-backed securities, has found a new group of potential buyers -- university endowments.

The Wall Street Journal reported (subscription required) that university endowments have started to dip into the risky world of buying sub-prime mortgage debt. An opportunity recently stemmed from two money-losing hedge funds at Bear Stearns (NYSE: BSC), and one that required loans from various banks to halt the seizure of the fund. Merrill Lynch & Co. (NYSE: MER) a lender to these funds, auctioned some assets it had seized from Bear for $850 million. However, the auction sold for less than half that amount, according to people familiar with the matter.

Lou Morrell, vice president for investments and treasurer at Wake Forest University in Winston-Salem, N.C. is quoted as saying he sees value in those auctions. "There's an opportunity out there to buy these loans at a discount," he told the WSJ, and that "will be popular with a lot of endowments out there." The university is placing $25 million of its $1.2 billion endowment with a hedge fund to invest in sub-prime mortgages.

They're not the only ones dealing in big risk either.

Dendreon (NASDAQ: DNDN) option implied volatility suggests large risk into PDUFA.

DNDN is recently down $0.27 to $15.18. DNDN Provenge has a May 15th PDUFA date. On 3/29 the FDA Advisory Panel said DNDN's Provenge is safe for prostate cancer. DNDN May option implied volatility is above 210 according to Track Data, suggesting large risk.

Microsoft (NASDAQ: MSFT) implied volatility collapses after EPS; suggesting less risk.

MSFT, is recently up $1.21 to $30.31, after reporting a third-quarter profit increase of 65%. Prudential Securities said "Strong F3Q results driven by better than expected Vista sales to the consumer market; provides largely inline FY08 guidance." MSFT call option volume of 135,478 contracts compares to put volume of 58,345 contracts. MSFT May option implied volatility of 19 is below yesterday's level of 26 and below its 26-week average of 21 according to Track Data, suggesting decreasing risk.

Option volume leaders today are: Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

This morning, Time Warner Cable Inc. (NYSE: TWC) announced in an SEC Filing that it is commencing an offering of debt securities with 5, 10, and 30 year maturities. The net proceeds from the debt issuance will be used to repay a portion of its outstanding bank debt and for general corporate purposes.

Unfortunately, because the debt amounts are not specified and since these are unregistered, we probably won't really know how much was sold until the next quarter's results are out in July.

These debt sales are not for retail clients as they fall under the Rule 144A, which usually has $100,000 minimums and they are not required to be registered. These securities are actually the first security sales under filing for the cable entity since it became a separate entity from Time Warner, Inc. (NYSE: TWX).

The cable subsidiaries Time Warner Entertainment Company, L.P. and TW NY Cable Holding Inc. are the listed guarantors of the debt securities.