This schizoid behavior mostly kept the front and middle maturities under water, while the curve reneged on some of its recent steepness. The September bond found traction around 104-13 congestion and finished on highs, while the two-year note and 30-year note spread narrowed to +173 basis points from +180 basis points right after the FOMC.
A big inventory build and upwards back revision on natural gas inventories prompted a 10% drop in natural gas prices -- reflecting waning power demand in California via the slowdown and cool weather. This combined with a Washington advisor story on Fed surprise over the extent of the slowdown. This helped bolster the back-end against the front, which was beset by a strong German IFO report and IMF rescue package for Argentina. A fund sold two-year notes and five-year notes, while Japanese accts bought agencies. The dollar recuperated somewhat.