Treasuries sputtered Wednesday, unsuccessfully struggling to break free of equities ahead of payrolls on Friday. The curve maintained its steeper profile in the meantime, despite the sharp headline gains in ISM's May services index to 60.1 (new orders gained only slightly and prices paid fell).
The Nasdaq stumbled in the morning, dragged down by Hewlett-Packard, Dell, Tibco and Manugistics, while better same-store sales from Wal-Mart kept the Dow and S&P firm. Late in the session Oracle confirmed fourth-quarter earnings per share guidance, which sparked a late tech rally.
Patient Fedspeak from Greenspan Tuesday and the Bank of Japan's moves to recycle its dollars helped the front-end, with the two-year note and 30-year bond spread widening one basis point to +251 basis points. The September bond closed down about a half point at 100-27. Oil prices dipped and recovered after a large crude build reported on both API and DoE data, while gold tumbled $6 to $320.50/oz on profit-taking, with the two weighing on the CRB.
Dec euro$ followed the twists and turns on Wall Street, with CME dealers seeing little reason to sell below 97.11 after light profit-taking from 97.20. The ECB, MPC and Riksbank all make policy decisions Thursday, which could constrain activity Wednesday night.