Late Buying Boosts Treasuries

A stealth rally was fueled by short-covering and equity losses

A stealth Treasury rally blossomed late in Tuesday's session, propelled by a short-squeeze and morose stocks after President Bush was long on rhetoric and short on specifics in a keynote speech to address corporate accountability. Tension built ahead of the late morning speech, but it was already leaked to the press and appeared to lack concrete measures sufficient to reverse investor unease. Treasuries were the beneficiaries of this negative sentiment and firmer weekly retail sales figures were mostly ignored.

Upwards momentum started to build after spurious rumors of bomb/incidents in NY and DC and a generally weak Richmond Fed manufacturing survey also prompted a bid particularly at the front-end of the yield curve.