Action Economics: Treasuries were little changed on the CPI and Empire State data. The marquee release, CPI, came in as expected, leaving the "fear trade" to dominate action today. The core rate remains sticky just above the Fed's comfort zone, and won't necessarily provide the FOMC the kind of flexibility the markets want to see. Meanwhile, the strength in the Empire State reflects the improvement in the economy since the slow Q1 pace. Though the data are always of interest, traders are preoccupied with the spread of subprime woes moving into other asset backed markets, with fears weighing heavily on stocks. The 2-year note is at 4.32%, while the 10-year is at 4.715%.
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