News that Microsoft's antitrust appeal went its way Friday set up tech shares for a bounce Monday, as did budding hopes of a coordinated policy ease this week in Europe and the states. Refunding maturities cheapened up readily, with five-year notes underperforming, 10-year notes not far behind, and the wings of the curve relatively muted, though the December bond was down nearly a point at one stage.
Data was very friendly, but eclipsed by the overnight move on stocks. September factory orders fell 2.3% after a 0.4% drop in August, while Challenger planned layoffs surged 151% to 176,000 in October. Job cuts were heaviest in the telecoms and computer sectors, though the SIA reported a 21% jump in semiconductor sales that also helped the Nasdaq (+2.6%) outperform.
The December bond closed 21/32 lower at 109-23, while the two-year notes and 30-year bond spread merely narrowed one basis point to +327 basis point. Several financial, chemical and consumer goods corporate issues totaling nearly $3 billion were primed for market and pressured swap spreads narrower.
On Tuesday, the five-year note auction and Congressional elections take center stage.