There is another theme emerging here, apart from breaking records: conditions have significantly improved in financial markets. There is no need to mention the very strong run by equity markets over the last three weeks, so let's look at some very positive indicators from the debt and money markets. Early January 2008 was mentioned above as being a significant time. In fact, that was the last time the major Australian banks issued 13-month extendible commercial paper in the US s144A market in significant volumes. At the time CBA issued US$2.5 billion of notes and nab issued US$3.0 billion. At the end of the month, ANZ issued US$3.75 billion of extendible CP and National Australia Bank issued a further US$0.75 billion. For each of these issues (in January 2008) the initial pricing was 20 to 21 basis points over Libor. The issues made last week by CBA and Westpac were priced at Libor flat! Admittedly the issues weren't as large as the ones made in January 2008, so there was no need to pay up to get volume. Nevertheless, this is a significant improvement in pricing, pointing to a significant increase in investor demand and also an improvement in underlying money markets.There hasn't been much talk about bank bill/Libor spreads to overnight index swap rates of late but a quick check of the three-month rates and their spreads shows that they have 'normalised'. The Australian spread reached a very normal 11 bps last week, while the US spread has been in the low 30 bps for the better part of July. In January 2008, the Australian spread ranged between 25-30 bps and the US spread was considerably wider.There has also been further substantial contraction in the main CDS indices. The Aussie iTraxx went below 150 bps last week, while the European Main and US CDX indices were down to 87 bps and 113 bps, respectively. And while the composition of the indices has changed, these are levels that haven't been seen since July last year, in the case of the Aussie iTraxx, and June last year for the other two.Finally, domestic secondary market demand is also strengthening. NAB reported last week seeing demand for three-year, major bank, bonds at 32 bps over bank bills/swap for government guaranteed issues and at 95 bps over for non-guaranteed issues. Original issuance in the primary market was 60 bps and 120 bps, respectively.