Treasuries End Higher

Firmer-than-expected retail sales figures didn't weigh on bonds after all

Treasuries performed well across the curve but were bolstered by a solid performance at the long end.

Retail sales failed to live up to its advanced billing as a market mover this week, after coming in much firmer than expected at -0.1% in December vs a -1.4% median forecast (-0.1% ex-auto vs unchanged). The reaction Tuesday to the important December data was blunted thanks to Greenspan's recovery skepticism on Friday. Perversely, stocks were under water for much of the session on Q4 earnings concerns, the dollar gained and Treasuries were bolstered by a solid performance at the long end.

After an early dip, the Mar bond rebounded from 103-00 congestive support and tripped buy-stops above 104-00 post-Greenspan highs, finishing up 20/32 at 103-30/32. The front-end lagged, however, as curve trades were unwound and the 2s/30s spread narrowed from recent wides of +263bp to +257bp. Convexity buying aided the Mar 10-year, which closed up 10/32 at 07-01.

A late rumor that a newswire Fedwatcher reported FOMC members being "bemused" by the back-up in easing odds may have caused a little volatility at session highs. Stocks anticipated reasonable Intel earnings results after the bell, gaining late.