The major equity indexes shed 3-5%, which marked a fresh cycle low since for all three indexes their fall from grace in March of 2000. CPI came in with a muted 0.1% core headline and core gain, while the trade gap blew out to a record $37.6 billion thanks in part to importer hoarding ahead of the potential longshoreman strike on the West Coast.
A number of economists accordingly marked down their estimates for Q2 GDP growth to the bottom of a 2-3% range, though this may mark the peak in the deficit near-term. The September bond closed up 19/32 at 105-06, while the curve steepened four basis points to +294 basis points before reversing back to +290 basis points after stalling ahead of the key +300 basis points psychological area.
There was some talk about foreign central bank two-way activity at the front-end, which was followed by an unusual "bill pass" by the Fed. The dollar index vacillated around 104 on a trade-weighted basis.