Treasuries Finish on a Strong Note

Weaker-than-expected retail data, a more cautious tone from Greenspan, and rumors that foot and mouth disease has surfaced in the U.S. boosted shorter-dated issues

Rumors and innuendos propelled shorter dated Treasuries higher Wednesday, while a heavy corporate calender dampened gains at the long end. Talk out of London of strong retail sales, up as much as 3%, put Treasuries on cautiously bearish footing heading into retail sales data. While the print of a much softer than expected 0.3% gain in sales quickly forced shorts to cover and curve flattening trades to be unwound, the bullish reaction was muted by expectations Greenspan would be out in the afternoon with a more upbeat comments on the economy.

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