What a reversal. Treasuries opened lower on profit-taking. Mortgage services sold outright and in the options market, with swappers large sellers of back-month Eurodollars. But dips proved to be shallow, as short covering and speculative bids under the market surfaced.
Prices moved back into the black, sparking a round of buying. In addition, a bullish New York based think-tank report, and a prestigious investment bank recommendation to buy fixed income paper, all underscored the continuation of the rally.
The new highs forced in more buying, and eventually, retail was also dragged in. Speculative buying lifted 5-years and 10-years on bets mortgage convexity hedging will soon surface. But late session option sales reversed the uptick. Prices ground lower, reversing the gains at the close.