It was a round trip for stocks on Tuesday, but Treasuries mostly hung on to their bid on mounting fears of a synchronized global slowdown, even as a sketchy pre-announcement earnings season unfolded. Stocks fell hard after Finnish mobile phone giant Nokia warned and cut its Q2 sales figures in half.
Recessionary Japan GDP Monday, Nokia warnings on Tuesday and warnings from the BIS on risks from U.S. imbalances and slowing global growth, sent prices higher across the curve. Gains were led by the intermediate maturities despite the launch of fresh corporate issuance mainly in 5s and 10s. Even though stocks mostly recovered steep losses by the end of the session, the September bond closed up 15/32 at 101-09 after setting highs of 101-16 -- the best level in over a month.
Outright volumes were very light, though some call buying on euro dollars and 10s was noted early on. A batch of secondary retail sales reports (redbook and BTM) and a soft Richmond Fed index previewed a likely damp result for Wednesday's May report to boot. New York Fed President McDonough had something for the bulls and the bears, but he noted downside global risks.