Fed Fears Hit Treasuries
The Treasury curve flattened the Monday before the FOMC, reversing some of its recent bullish momentum in deference to the typically perverse reactions to well-discounted policy events. Data was really a non-starter ahead of the Fed and stocks enjoyed a modest oversold bounce. July leading indicators gained a steady 0.3%, marking the fourth straight gain and raising the odds of a recovery late in the year, though traders paid little attention. The Treasury budget for July posted a surprise $2.4 billion surplus, compared to expectations of an after-tax deficit, but still well below the $31.9 billion surplus posted this time last year.
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