Prices have firmed most in the belly of the curve, going with the grain of stock weakness (-2-3%) and a middle maturity coupon pass, while leaving any concession building on supply to Tuesday and Wednesday. The March bond cleared 104, but stalled shy of 104-11 January highs, to close up 26/32 at 104-04. The curve steepened four basis points against the trend to +237 basis points as investor anxiety on the equity side supported the front-end over the back.
Stronger gains were probably checked by dollar weakness, which fell 1% on a trade-weighted basis for one of the biggest drops this year. Two-year yields dipped back below 3.0% and the Fed loan survey showed credit tightness. As expected, Treasury bill results were solid amid the carnage on Wall St.