Treasuries End Mostly Higher
Treasuries opened higher as the stock market rally made its first corrective retreat after about a week's worth of gains and stubborn initial jobless claims gained another 5,000 to 439,000. Continued claims hit highs not seen since in over 20-years. But bonds soon followed stocks instincts and rolled back over after Greenspan stuck close to the topic of natural gas in Energy Committee hearings, without any dovish hints on policy.
In an interview with Senator Corzine (formerly of Goldman) late Wednesday he favored a resumption of bond issuance when queried about what he would discuss with the replacement of Treasury Under Secretary Fisher. Discussion of that interview also led to the midday slump on the long bond, which dragged other maturities off their highs as well.
Stocks extended their slide in afternoon trade, with the Nasdaq falling 2%, which subsequently helped arrest the slide in Treasuries. The September bond closed up 6/32 at 115-13 after testing 115-00 psych support earlier in the session. The curve steepened, with the 2-year note and 30-year bond spread closing 3 basis points wider at +339 basis points as the bond underperformed.
The dollar was a little spooked by the claims data and stock slide, never really recovering its footing.