Calming words about inflation in the Fed's May beige book resulted in a pullback in Treasury yields, according to S&P's MarketScope. Treasuries ended modeslty changed as a result of mixed data and large BUND/Treasury unwinds. BUNDs plunged on hawkish Trichet comments, but triggered BUND/Treasury spread unwinds, so Treasuries rose instead of falling in sympathy. A large batch of mixed U.S. data added to the price volatility (CPI, Empire Index, Business Inv entory, TICs) But the drop in TICs and a hawkish Fed Kohn were the last straws. Treasuries declined to session lows. The Beige Book sparked a muted market reaction - a rosy economic picture, but saw the need for improvment.
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