Treasuries End Mostly Higher

Shorter-dated issues outperformed as U.S. troops entered Baghdad and as North Korea came back on stage. Data disappointed, adding to concerns that payrolls on Friday could be soft

Both Treasuries and stocks experienced an aimless session as Allied troops jockeyed for position around Baghdad and Friday payrolls data approached, trading places a couple of times and finishing close to where they began. The curve steepened back out to fresh 11-year wides and Eurodollar futures had a good day, as the military campaign embarked on a high stakes end-game.

Allies seized the Saddam International Airport, though speculation overnight was that Iraqi leader already punched his one-way ticket to Syria. The session was confounded partly by the downing of a Black Hawk helicopter and more friendly-fire incidents in the air, though the relentless advance on the capital and lack of chemical weapon deployment offset the bad news.

The Pentagon warned on a more "lethal" phase ahead for U.S. troops, which kept the markets jumpy. Data was friendly, with claims up 38,000 and ISM services down to 47.9. The June bond shed 1/32 to close in the red at 111-16, while the 2-year note and 30-year bond spread nearly topped +340 basis points for a gain of 4 basis points.

All other maturities closed well in the green. Among fear proxies, gold sank $5 to +325/oz, while crude oil traded nervously around $29/bbl. Fedspeak was benign and Greenspan stayed off the topic of policy.

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