Treasuries struggled to stay in positive territory Tuesday, as a low-volume up-move in the morning proved a poor platform on which to build gains in the afternoon. Dealers were mostly sidelined ahead of Greenspan's panel discussion with other central bankers in Montreal and with payrolls looming Friday.
This left the market vulnerable to technicals and subject to the ebb and flow on equities, which had trouble digesting news that Knight Trading may be investigated by the SEC and NASD for front-running trades on its platform (after suffering from a "mistaken" block sale of its own stock Monday).
A midday dead-cat bounce on stocks, however, encouraged more profit taking on bonds after the September bond ran into resistance shy of the 102-handle. Greenspan said nothing had really changed on the economic outlook since January, underscoring his cautious optimism and likely policy patience.
Challenger layoffs shrank to 85,000, but the private firm said seasonals were a factor. The September bond closed up 5/32 at 101-12, while the two-year note and 30-year bond spread marched four basis points higher to +250 basis points.
From Standard & Poor's Global Markets