An 18.8% jump in the MBA refinancing index and an MSDW reported mortgage prepayment surge underlined the need for MBS players to hedge their shrinking portfolios with intermediate maturity notes as well.
Stocks held their own for much of the day, though an after-hours announcement pending from web portal Yahoo cast a cloud over tech shares.
A "sluggish to modest" Fed Beige Book report left easing hopes intact, and helped the June bond close +26/32 at 105-14, while the cash bond closed nearly a point higher.
The weak yen reflected some Asian flight into bonds. Fed's McTeer and Poole downplayed recession. Greenspan encouraged once-lax lenders to open their wallets.