Greenspan joined a parade of other Fed members who struck a hopeful tone that the economy would recover in the second half. Yet, among them, McTeer and Moskow seemed to lay the groundwork for a rise in unemployment going forward and McTeer warned about a confidence catalyst like China toppling the economy into recession.
The June bond continued to find support ahead of 103-16 Friday lows, but momentum was clearly lacking over 104. The curve continued its inexorable steepening profile at +138 basis points, hitting the widest 2s/30s spread since July 1994 as the zombie-like stock market and China tension kept a bid under short-dates.
This leaves the front-end very rich going into payrolls, and U.S. Sec. of State Powell did deliver a half-apology to China over its lost pilot.
Stocks traded around rumors of Lucent's bankruptcy, which the company later denied.