After last week's pandemonium, Treasuries began the week on Monday relatively sedately. Second tier data was mulled and flurries of corporate supply launched, but by and large the market was continent to heal its wounds.

After very light short-covering on the vague and present danger of Iraq engagement and initial stock declines, Treasuries rolled over ahead of the close as equities snapped back.

Wholesale sales jumped 1.2% in January and a modest 0.2% drop in inventories underpinned recovery hopes, but were initially shrugged off. The narrow price action spoke the volumes that were not traded, with the main strategy that of wait-and-see into Wednesday's retail sales. In terms of flow, a Midwest bank was a "program" buyer of calls on June 10-year notes, which may have contributed to the temporary bid in the market all else equal. The Jun bond closed down a mere 1/32 at 98-28, nearer the bottom end of its 99-12 to 98-24 range. The yield curve held very steady at narrower levels, with the two-year note and 30-year bond spread unchanged at +215 basis points. Dallas Fed's McTeer again warned about raising rates prematurely.

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