Treasuries continued to flail around at lower levels Tuesday, giving back early gains posted on the back of fresh equity anxiety in the tech sector. Unwinding of recent curve flattening trades kept the front-end relatively buoyant, though provided little solace to the long-end. Data was limited to soft weekly retail reports, which apparently failed to stir much hope that the February number will prove non-threatening to Treasuries Wednesday.
Combined with a Greenspan speech scheduled Wednesday afternoon and a late recovery on stocks, this kept bonds beaten down. The June bond attempted to clear 99-20 congestion early on, but skulked back below 99-00 to close down 1/32 at 98-29. The two-year note and 30-year bond spread widened five basis points to 219 basis points.
Supply kept the market a little unsteady, as did general narrowing of spread product at the long-end. A rebound in the Richmond Fed services indices also took some starch out. Several corporate and agency deals queued up and a jumbo $6.6 bln GECC multi- trancher loomed over the market. Fed Governor Gramlich opaquely questioned whether or not the U.S. had experienced a recession.