A shudder of risk aversion on Thursday kept Treasuries underpinned, despite a solid gain in retail sales, an odd Thanksgiving distortion in the 83,000 jobless claims jump, and a drop in the current account deficit. No single event drove the market, though a sudden $8/oz surge in the price of gold to five-year highs and simultaneous dollar weakness spoke to an accumulation of fears about weak global growth and geopolitical stress.
Some of this focussed on North Korea the day after the Scud shipment. The IMF also published a very bearish report on the global economy, detailing concerns over the stamina of the U.S. consumer, the European banking sector, and Japan.
Most of the strength registered in the shorter maturities thanks to the jittery stock market, which may have to face a potential transport strike in New York city on Monday as well.
The two-year note and 30-year bond spread widened three basis points to +306 basis points, with recent wides of +311 basis points looming and the 10-year note yield gyrating around 4.0%.
Yet, the March bond merely closed 1/32 higher at 109-10. There was some initial heaviness in the belly of the curve, likely mortgage-related and some decent selling of volume on five-year and 10-year notes early on. The CRB rallied to fresh 2002 highs above 233, powered by precious metals and energy.