It was another stock roller-coaster ride on Monday, the very day before the first leg of Greenspan's semi-annual economic report to Congress. A heavy European equity close (-5.0% to -5.5%) set the negative tone on Wall Street, which built early losses into a 400-point deficit on the Dow at one point.
The Treasury curve kept its steeper profile, but never extended gains much thanks to the pitfalls of Greenspan's testimony and at the threshold of heavy week for Q2 corporate earnings. The only data on offer was business inventories, which posted a 0.2% rise in May, but it was a double-edged sword whether this was forced or voluntary restocking.
The September bond closed down 13/32 at session lows of 104-26, almost a point lower than the high of 105-24, while the two-year note and 30-year bond spread widened five basis points to +286 basis points.
Cash contracts lost more after the futures close, with the cash bond off nearly a point after the Nasdaq comp reversed into the green. Bush made his second attempt to verbally shore up confidence in the economy, but stocks sank harder afterwards before their late rebound. The trade-weighted dollar plunged below 105 to fresh cycle lows before paring some losses.