Wednesday was another roller-coaster ride for Treasuries, with the entire yield curve cheapening up and moving higher. Non-government supply continued to flood the market and forestall any gains, particularly in the middle of the curve.
A series of Fed sources stories also thickened the clouds of doubt over the scale and timing of the Fed's next move on rates, while comments from Boston Fed's Minehan stopped short of confirming the market's worst fears on the economy. Analyst downgrades of Cisco and a dose of realism from that company's CEO on earnings prospects this quarter compounded volatility on stocks, which were already aflutter ahead of key Yahoo and Motorola reports after hours.
The Mar bond was hustled down through tiers of stops at 104-23/18 by a couple of shops earlier, but beholden to NASDAQ chopped lower for the bulk of the session, closing down 26/32 at 104-15. The cash bond extended losses to over a full point as NASDAQ rallied 3.2% into the close. The Treasury's 10-year TIPS auction went poorly, with low demand mirroring inflation expectations.