The collapse in oil prices after the ouster of Venezuelan President Chavez was a bonus as well, helping yields to close at their lowest level in over a month to set up the market for next week's JEC testimony by Greenspan. NYMEX May crude dove $1.5 to $23.70/barrel, following successive losses in April.
The June bond closed up 11/32 at 100-30/32, near session highs after reversing hard from 100-07 lows. The curve steepened on more suicide bombings in the West Bank, which combined with the benign data to widen the two-year note and 30-year bond spread by five basis points to 230 basis points before it stalled out.
Two-year yields slumped nearly 10 basis points to 3.32%, while the bond yield sank 6 basis points to 5.64%. Risk of a May Fed hike was virtually erased (12%) and fell below its previous "lock" for June (80%).