Treasuries Finish Lower
Treasuries closed sharply lower after stocks garnered some fresh traction, while finally showing some indigestion from the flood of corporate supply. Losses were led by the belly of the curve, with the wings trailing fairly evenly. An 11.4% plunge in October housing starts helped Treasuries initially ignore the recovery of U.S. stocks, but asset allocation trades and stop-loss selling eventually took their toll.
Several billion in corporate deals were tabled and hedging these instruments left Treasuries heavy. Despite a dour tone in Europe, U.S. shares were bid higher led by wireless telecom stocks and chip makers, with the Nasdaq powering above 1400 and closing 3.2% higher. H-P computer beat Street earnings estimates by two cents after the close, adding some potential fuel ahead on top of the day's gains.
The December bond knifed through its 50-day moving average, closing over a point lower at 111-1/32, though the two-year note and 30-year bond spread was scarcely changed at +298 basis points.
Fedspeak rounded out the session, with Chicago Fed's Moskow (non-voter) warning that the Fed would be "monitoring very closely consumer spending" during the key holiday shopping season. He also said the Fed was not constrained by current low rates.
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