The surprise, the mundane, and the expected left Treasuries choppy and defensive Wednesday. Fourth quarter GDP provided the day's surprise, rising 0.2% compared to expectations of a 1% contraction. The Treasury provided the mundane, announcing a more-or-less anticipated $29 billion refunding package and reinstituting bond buy backs for April.
The Fed provided the expected, leaving rates unchanged at 1.75% and maintaining a bias toward easing. Treasuries chopped and churned mostly in line with the mood swings on Wall Street ahead of the FOMC result, but rounded out the session on a heavier note as stocks finally got a grip and finished strongly.
The March bond bounced after probing under 103 a couple times, but ran out of room on the upside above 103-20, closing down 2/32 at 103-06. However, the cash curve closed much more heavily thanks to the late push on equities, with the front-end accordingly underperforming. The curve kept to its flatter bias following the resumption of bond buybacks ($3-4 billion in April), with the two-year note and 30-year bond spread finishing around +236 basis points. ECI and jobless claims are due Thursday, and payrolls loom Friday.