Short Covering Boosts Long Bond

Treasuries gain following the pricing of France Telecom's $9 billion debt offering

A combination of supply, curve unwinds, convexity demand and short-covering in front of payrolls boosted the long-end sharply Wednesday. France Telecom set an early positive tone for the market with rate locks sprung on $9 billion worth of U.S. paper. The market took down the record supply readily and this seemed to offset any worries that Treasuries would be "crowded out," though there's another $10 billion in 2s and 5s to go from Freddie Mac on Thursday.

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