Wall Street, anxious that "where there's smoke, there's fire," suffered from retail and tech earnings warnings which combined with fresh financial sector fears sent NASDAQ comp down 6%, below the half-way mark of the Fed-induced 14% rally. This ignited flight-to-quality flows into the front end of the Treasury curve, bills, Euro$ and Fed funds futures. The curve steepened sharply, with the long end lagging on the stagflation implied in payrolls report which saw further manufacturing declines, but also chunky wage gains.
But November new home sales sank 2.2% as well, and the March bond eventually closed near 105-20 session high -- some 50% above its 104-03 freefall lows hit Thurs. 2-year yields continued to race south of Fed funds, with a gap of -145bp raising Fed cut hopes.