Fedspeak and supply may have also played a role, with Chicago Fed's Moskow on the tape and several 30-year corporate issues put on the auction block. Moskow initially sounded more sincere about the economic recovery, which may have provided an excuse for profit-taking, but later pointed out that consumption and auto sales were stalling.
Sara Lee, Anheuser Busch and Target all priced or offered a total of $1.4 billion in 30-year bonds, possibly initially hedged via cash bond sales.
Stocks couldn't hold the bid prompted by the Fed talk, Citigroup upgrade and upbeat remarks about PC demand from Dell, closing 1-1.5% in the red.
The December bond closed 1/32 lower right at the 109-handle, down from 109-12 session highs. The two-year note and 30-year bond spread widened another 10 basis points to +320 basis points.
Dollar losses dominated the early session, amid rumors of distressed selling of stale long dollar positions and the Fed talk, which may have contributed to some flight to quality.