Earnings season continued to gnaw away Monday at stock market capitalization and Treasuries were net beneficiaries, especially at the front-end of the curve. A couple of unscheduled events also boosted bond sentiment; S&P Ratings downgraded Japan's sovereign foreign exchange debt and a bomb hoax briefly closed Washington, D.C., area retail banks.
A $1 recovery in oil prices on the reverse coup in Venezuela slowed gains at the long-end slightly. The CRB also rebounded two points above 197.25 with the 6.5% surge in the energy complex. Bland inventory data was largely shrugged off, as was a steady NAHB housing index.
Spread product mostly widened as corporate deals dried up, affording swap spreads some breathing room, while agencies widened on a couple derogatory articles in Barron's and the WSJ. Fannie Mae is also reportedly prepping a $5 to $6 billion two-year issue, which will compete for favor with the Treasury's own upcoming two-year issue to be announced Wednesday.
The June bond closed up 11/32 at 101-10 and yields continued to creep lower across the cash curve. But, the two-year note and 30-year bond spread continued to bump against +230 basis point resistance.