Fed Fears Hit Treasuries

Bonds sank on investors concerns that Greenspan's expected interest-rate cut on Tuesday may be the last for the year

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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