Factory Orders gained 1.6%, though from downwardly revised Dec data and the extremely low 1.33 I/S ratio certainly flagged inventory rebuilding ahead in Q1/Q2. The June bond finished down 18/32 at 101-10 and the curve held a steeper profile, up 5 basis points to +230 basis points on the 2s/30s spread. The market was depressed ahead of supply and only got a brief pop after the $5.5 billion Weyerhaeuser 5-parter priced. The Fed's Beige Book of regional economic conditions also came late in the session. The report was more upbeat than previously in January, but perhaps not as uniformly strong as expected.
Fed's McTeer and Santomero weighed in on the policy debate a day ahead of Greenspan's second round of testimony, mostly going with the flow of an economic turnaround in progress. Santomero warned of a bias shift soon, while more dovish McTeer argued against premature moves.