Treasuries Fall to Profit Taking

Treasuries fell in the wake of a stronger-than-expected Philly Fed report and weaker U.S. dollar

Treasuries found nothing to cheer about Thursday as a combination of strong data, a weak dollar, and technicals helped take out some of the recent frothiness in bonds. Indeed, not even another poor day on Wall Street could waylay profit-taking pressures and the bond closed down about a point. After bond prices surged to new peaks for the year Wednesday, traders had little incentive to try to push the market higher.

Treasuries struggled from the open and losses were extended after data showing a sharp widening in the trade and current account deficits weighed heavily on the dollar. There was talk of size selling in the bond by a hedge fund on the dollar's slump.

Weakness in stocks provided some marginal support, but a stronger than expected rise in leading indicators and an unexpected surge in the Philly Fed index to 22.2 in June from 9.1 sideswiped Treasuries for the duration. A brief data-related knee-jerk rebound in equities added to pressures on bonds.

And though Wall Street's rebound proved transitory, Treasuries couldn't hold a bid as the day's strategy in fixed income was to sell strength. Reports of "black box" technical selling on the break of key levels also contributed to extended price declines.

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