The note enjoyed gains from session's start as geopolitical jitters, along with terrorist fears in the U.S. and falling equities, helped firm the bid. A weak leading indicators report also benefitted overall tone as the contract rallied into the close and finished at its highs of the day.
The dollar's value continued to erode and gold surged to 15-month highs of $316.40/oz, but none of this fazed Treasuries for very long. Non-governmental issuance continued to wash through, with a $3 billion Fannie Mae reopening announced and a Freddie Mac $1.5 billion offering as well as several other smaller corporate deals.
U.S. leading indicators fell 0.4% in April after an unrevised 0.1% increase in March. This figure is weaker than the expected 0.1% decline, and though modestly friendly for Treasuries, it shouldn't have much lasting market impact as the index has been on the rise since September, 2001. Weakness in money supply paced the decline. The conincident indicator was up 0.2%.
The Treasury chopped $7 billion off the 4-week bills knocking the volume down to $18 billion for tomorrow's auction. This sale will raise $9.0 billion in new cash. The Treasury continues to manipulate the its financing needs via the bills. Note the bills have gone from $9 billion on April 22 to $25 billion last week, to $18 billion this week.