Treasuries closed unchanged to slightly lower in lackluster trading Wednesday. But it wasn't for lack of trying. Indeed, there may have been too many pulls and pushes on bonds for traders to get a confident grip on direction, or they just tired of the effort of tracking flows. Gyrations on Wall Street provided most of the fulcrum for bonds, but the ongoing violence in the Mideast, the dynamics of the oil market, supply, technicals, and Fed policy considerations were all significant undercurrents.
A little profit-taking was evident in bonds at the open, though curve steepening play remained intact. PIMCO's disdain for the long-end weighed further, and especially as stocks rallied and more corporate supply was launched. The June bond briefly climbed into the black as the Nasdaq failed to hold support at 1750, but closed down 8/32 as sidelined institutional cash flooded back into stocks. Meanwhile, more news of Mideast violence kept the short-end relatively well bid, though the two-year note and 30-year bond spread steepening was impeded at +225 basis points. Technical signals are crossed, with an overbought market worrying longs, but shorts premature.