Treasuries End Lower
Hit-and-run transparency. Treasuries cut early data-sponsored losses as month-end indexers ruled the thin shortened session, while Fed Chairman Greenspan's speech on "Monetary Policy under Uncertainty" gave little away in terms of the policy trajectory. Data was mostly very solid, with income (+0.2%) and consumption (+0.8%) up in July, while Chicago-PMI surged to 58.9 in August from 55.9. Final U. Michigan consumer sentiment was the lone exception, revised down to 89.3 in August from 90.2 (90.9 in July).
Hopes for an elaboration on the policy outlook were dashed by a typically enigmatic speech favoring a flexible "risk management" policy approach in contrast to a more rigid inflation target. The market overcame the bearish firm data, however, helped by month-end index duration extensions after the record refunding. This mainly helped prices cull their data-led losses ahead of the early close and offset some bearish call selling against October and December 10-year notes.
The September bond finished 6/32 in the red at 107-13, well above session lows of 106-30. The 2-year note and 30-year bond spread steepened one basis point to +326 basis points. The dollar had a soggy session after it was revealed the Bank of Japan did not intervene in August and gold hit the highest level since February.