Treasuries were all over the place. They opened lower, fell further on strong construction spending data, but recouped losses later in the session. Technical selling dominated the early flow. Hedge funds dominated the selling pressure in the Eurodollars.
Players re-evaluated the Fed, despite weekend Fedspeak suggesting steady rates. Retail flow was light, but mixed, with dealer participation was limited to hedging burgeoning corporate supply and the new 5-year note and 10-year TIPS; the Treasury announced the sale of $16 billion and $12b billion, respectively.
But by midday, prices moved back into the black on hefty swap receiving and large agency buying, which resulted in Treasury buying. Gains, though not as sustained as technical selling, emerged into the close.