The June bond closed 4/32 higher, grasping the 102-handle after reversing sharply from below 101-00. The 2s/30s cleared +146 basis points to set cycle highs to take fresh aim at +166-basis-point June 1994 wides, after basing in the +114-basis-points area.
Short-covering was most pronounced in the front-end as the Fed cut raised concerns about corporate distress -- the yield on the 2-year note fell a breathtaking 30 basis points back below 4.2%. Hedge fund buying of $2.5 billion in cash 2s and $1 billion in 5s was rumored, and pre-Fed and short-covering on 10s also got the ball rolling.
The trade gap narrowed, LEI eased 0.3% and the dollar slipped.