Gains were extended through the morning as the dollar gained ground against the yen and EUR. Meanwhile, the NASDAQ, still smarting from Juniper's earnings warning last week, fell over 2% and pulling down the Dow and S&Ps with it. Note the dollar managed to weather the weakness in stocks, riding high on faith that the Fed and tax cuts will rescue the economy. The Fed's purchase of $471 million in TIPS was also supportive.
Hedge funds were reportedly good buyers of 2-year notes. The break of 100-22 resistance on the September bond added to the positive tone, as did benign comments from Fed President McTeer.