The September bond broke into the 102-handle, but stalled at 102-10, closing 12/32 higher. The two-year note and 30-year bond spread remained locked around +250 basis points. There was some brief convexity excitement when declining 10-year swap yields tested the 5.5%, equating with 4.95% cash yields of the same maturity.
A flurry of mortgage-related buying appeared to kick in as those yield thresholds were probed. On the options front, a couple firm were reported selling 108 and 109 calls on September 10-year notes (bearish), which presaged a mid-morning dip. Another sold 10,000 105/106 call spreads.
The Fed's Beige Book outlook was for "modest but uneven growth."