Some early option activity was mostly of the bearish variety, with some put buying noted on benchmark 10-year notes. This appeared to contribute to a midmorning slump, but prices didn't stay down for long after stocks rolled over and eclipsed their two-day wonder rally in the course of a single session with declines of up to 3.5%.
Big cap blue chip titans fell like dominoes (Philip Morris, GE, SBC), which hammered the Dow and dragged under the S&P and NASDAQ. The December bond flourished, closing up 23/32 at 113-23, while the two-year note and 30-year bond spread steepened three basis points to +281 basis points.
A preview of the weekend G7 communique pointed out slow global growth, but no recession, echoing the Fed's recent reference to the "geopolitical" wild card. Comments that Japan might push for tolerance of yen weakening gave dollar-yen a brief leg up over the Y123-handle.