Dealers appeared uneasy very early on in the session holding their longs and the September bond did an about-face ahead of 102, closing down 18/32 at 100-24. The front-end of the curve underperformed as the equity rebound gained momentum and the weekend approached.
The two-year note and 30-year bond spread tested +255 basis point wides, then retreated to +252 basis points, helped by reports that mediation efforts between India and Pakistan were cooling tempers there.
The lack of upside follow-through was palpable right after the data and both outright and option flows were non-directional. Combined with ebbing volume and that sinking feeling, dealers braced for the inflexive rebound on stocks and folded their cards for the week.
Some agency desks also said Treasury Fisher's having "no problem" with government sponsored enterprise (GSE) risk management practices was a relative boost for agency debt today.