Treasuries opened higher following the Madrid bombings amid speculation of a link to Al Qaeda. Prices then tanked after the poor 10-year auction results, but popped by the close on an Arabic tape found in a van in Spain, which also contained detonators. Furthermore, France heightened its terror alert status.
The data were mixed and largely ignored. Greenspan's optimistic labor market comments reversed prices, but a mortgage bid surfaced on the dip. The 10-year results were poor -- a 3.752% stop. Dealers, now long, sold, but terror headlines rescued prices and underscored the rebound.