Concession, concession, concession. Thursday was the final leg of the Treasury's $32 billion quarter refunding and the day was all about cheapening up the bond before its auction, which was followed by a resounding rally.
Data wasn't much of a factor, although initial jobless claims jumped another 15,000 to 361,000 and Chicago Fed's Moskow (voter) warned Wednesday night of slowing growth in employment, but said the U.S. is likely not in a recession. Flat December inventories and a 0.7% jump in sales suggested the inventory correction is underway. The March bond stumbled early on with some temporary bargain hunting in stocks, falling nearly to its 103-22 50% retrace level before gaining traction after the auction. The bond was awarded at a better than expected 5.46%, and though the rest of the statistics weren't that impressive, the contract leapt afterwards to 104-18 session highs as stocks skidded lower into the close.
President Bush's $1.6 trillion tax relief bill was sent to Congress and Jerusalem bombings after Sharon's hardliner victory kept the market jittery. Rumors of a Bank of Japan "quant" ease on Friday kept dollar-yen at bid.