After very light short-covering on the vague and present danger of Iraq engagement and initial stock declines, Treasuries rolled over ahead of the close as equities snapped back.
Wholesale sales jumped 1.2% in January and a modest 0.2% drop in inventories underpinned recovery hopes, but were initially shrugged off. The narrow price action spoke the volumes that were not traded, with the main strategy that of wait-and-see into Wednesday's retail sales. In terms of flow, a Midwest bank was a "program" buyer of calls on June 10-year notes, which may have contributed to the temporary bid in the market all else equal. The Jun bond closed down a mere 1/32 at 98-28, nearer the bottom end of its 99-12 to 98-24 range. The yield curve held very steady at narrower levels, with the two-year note and 30-year bond spread unchanged at +215 basis points. Dallas Fed's McTeer again warned about raising rates prematurely.