Treasuries actually started the session well under water on rumors the January consumer confidence index would climb to 108 (from 94.6) and on a strong durables report (up 2.0%). However, Treasuries rallied on relief that confidence printed at only 97.3, proving the rumor false. Gains were extended through the afternoon as shorts covered, especially as equity losses deepened.
Markets & Finance
Treasuries Rally on Wall Street Woes
Treasuries posted a surprising rally Tuesday, seemingly undaunted by the impending Fed and Treasury announcements Wednesday. Instead, the focus was on a collapse on Wall Street as the key indexes fell over 3%. Shorter dated instruments outperformed. The yield on the two-year note dropped 20 basis points, overlooking expectations of a steady Fed policy stance Wednesday. Meanwhile, the five-year note shed about 20 basis points, ignoring concerns the Treasury will shift to monthly auction schedule. Helping to extend the gains was the 10-year note's break of 5%. The catalyst for Wall Street's woe was news of possible accounting skeletons in the closets of other high profile firms, including Tyco, Williams and Cendant.