Treasuries End Higher
The huge dollar intervention over the past two days translated into a very strong 2-year auction. 2-year notes did well afterward too, closing at the highs, further steepening the curve, led by more foreign-exchange intervention talk.
Treasuries spent most of the day in positive territory as Fed Chairman Greenspan testified before the House Budget Committee about limited growth in jobs, saying that rates will "remain highly accommodative". He also warned that Congress needs to cut spending to pay for future Social Security and Medicare.
Earlier, existing home sales were weaker than expected at 6.04 million. The market barely reacted, despite an initial pop on the data.
Democrat Presidential hopeful John Kerry says Greenspan has done a superb job on monetary policy and deserves credit for the U.S. economic growth in the 1990s. Hee backs another term for Greenspan. Kerry also says a strong dollar is needed to attract capital to the U.S. and supports U.S. debt. He's worried that a weak dollar may affect U.S. rates, and that dollar weakness may come back to haunt the U.S. Also, there's a rumor going around that Kerry may tap Robert Rubin to come back as Treasury Secretary.