Concerns about sovereign debt default and a worse than expected U.S. initial claims report is helping to push commodity and stock markets lower at the mid-session. Risk aversion is driving investors toward safer, lower-yielding assets.

The key level in the March E-mini S&P 500 at 1084.50 was violated with a vengeance, triggering a free fall to a new low for the week at 1064.75. Besides the fear that debt problems in Greece will spread to other Euro nations thereby disrupting the global economic recovery, traders are reacting as if tomorrow’s U.S. jobs report will not show an increase as expected. This morning, the government reported that initial claims rose more than economists had forecast. This triggered a selling spree in an already weak market.

March Treasury Bonds surged to the upside as economic worries pressured equities and commodities, sending investors into the safety of the Treasury markets. The sharp rise in Treasury Bonds sent this market screaming to the major 50% level at 118’24 as yields plunged. A close over this level will be bullish with 119’24 the next upside target.

The stronger Dollar drove April Gold through a pair of retracement levels and the last two main bottoms at $1076.50 and $1074.40. Downside momentum indicates a further decline is likely with a major 50% level at $1052.30 the next downside target.

Yesterday’s bearish crude oil inventory report along with a drop in demand for higher risk assets is pressuring March Crude Oil at the mid-session. The charts indicated that 75.29 to 74.63 would be the next downside targets, but these prices offered no support. Look for an acceleration to the downside should the pair of main bottoms at 72.53 and 72.43 fail to hold as support.

Investors are selling higher risk commodities and stocks and buying lower yielding assets on concerns the sovereign debt issues in Greece will spread to other economies in the Euro Region. The Dollar is trading higher versus all major currencies except the Yen.

Investor concerns about the sovereign debt woes in Greece ignited the break, but a decision by the Bank of England and poor U.S. jobs data helped to accelerate the rally in the Dollar. Traders are taking protection and seeking shelter in the Dollar and the Japanese Yen.

The March Euro is trading sharply lower, pressured by concerns that despite the proposal of a new budget plan, Greece lacks the means to deal with its deficit issues on its own. Fears are also being raised that the fiscal problems in Greece are not isolated and may spread throughout the Euro Region should it default on its debt. Risk aversion is setting in and traders are bailing out of the Euro as they seek protection against the possibility of a collapse in Greece.

This morning the European Central Bank announced that interest rates would remain at 1% and stimulus intact as the economic conditions in the Euro Zone have not improved enough to warrant any changes. Although ECB President Trichet said he “is confident” that Greece would get its budget under control, traders are acting as if it is going to take a bailout by the European Central Bank, European Union or International Monetary Fund to take care of the problem.

At the mid-session, the Euro is trading under an important 50% at 1.3800. Downside momentum is strong which could drive this market to the .618 level at 1.3483.

The Bank of England as expected announced that interest rates would remain at a historically low level. In addition, they voted to take a pause in its quantitative easing program, but left open the possibility it would increase its asset buyback program should conditions warrant such a move.

The March Japanese Yen is trading sharply higher at the mid-session as investors are seeking safety in lower yielding assets over concerns about the possibility of sovereign debt default in Greece. Traders took the Yen higher after the ECB offered no viable solution to the problems in Greece, nor did it provide any confidence that the matter would not spread to other Euro Region nations. The Japanese Yen tends to strengthen during economic turmoil and uncertainty.

Look for this contract to be the risk sentiment indicator today. As long as the fear of default exists, the Yen should continue to appreciate. At this time, the Bank of Japan has no plans to halt the rise in its currency. This could help fuel a steep rally in the Yen over the near-term.

The stronger Dollar is pressuring demand for commodities, namely gold and crude oil. This is helping to pressure the Canadian Dollar. Strong downside momentum drove this market through the last main bottom at .9326. The weekly chart indicates that .9212 is the next downside target.

The weakening Euro has once again raised fears the Swiss National Bank may intervene to prevent the Swiss Franc from appreciating too much versus the Euro. This is helping to break the March Swiss Franc at the mid-session. Barring any changes with the Greece sovereign debt situation, the next downside target is .9152.