Treasuries wandered aimlessly above session lows Monday after extending losses under the weight of supply and initial strong stock gains in both Europe and the U.S.
News that Microsoft's antitrust appeal went its way Friday set up tech shares for a bounce Monday, as did budding hopes of a coordinated policy ease this week in Europe and the states. Refunding maturities cheapened up readily, with five-year notes underperforming, 10-year notes not far behind, and the wings of the curve relatively muted, though the December bond was down nearly a point at one stage.
Data was very friendly, but eclipsed by the overnight move on stocks. September factory orders fell 2.3% after a 0.4% drop in August, while Challenger planned layoffs surged 151% to 176,000 in October. Job cuts were heaviest in the telecoms and computer sectors, though the SIA reported a 21% jump in semiconductor sales that also helped the Nasdaq (+2.6%) outperform.
The December bond closed 21/32 lower at 109-23, while the two-year notes and 30-year bond spread merely narrowed one basis point to +327 basis point. Several financial, chemical and consumer goods corporate issues totaling nearly $3 billion were primed for market and pressured swap spreads narrower.
On Tuesday, the five-year note auction and Congressional elections take center stage.