Treasuries Collapse as Fed Expectations are Pared Back

Prices were vulnerable to an equity rally ahead of Greenspan's Senate Budget Committee testimony

By Tuesday's close the curve lost its initial bid and prices fell sharply, whipsawed by an infestation of Fed sources stories which crept into the policy pot in thin conditions ahead of Greenspan's Senate Budget Committee testimony. Though Senate focus should be on his macro view of the monetary/fiscal policy mix, markets are keying off any rate cues ahead of next week's FOMC.

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