Five-year notes outperformed over the session, but gains at the long-end lagged, allowing the two-year notes and 30-year notes spread to widen to +185 basis points. The September bond planted its flag at a session peak of 104-17, but finished up merely 4/32 at 104-04. The only piece of second-tier data was the Kansas City Fed's July Manufacturing Output Index, which imploded -21 from June and -28 from a year ago. This was the lowest since the advent of the survey in October 1994, but a deterioration already well-documented in the manufacturing heartland.
The Nasdaq rally -- inspired by Goldman's upgrade of chip stocks -- initially fizzled, before a closing flourish. Also of note was French brokerage selling 5,000 "covered" December 109 calls on 10-year notes.