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Treasuries rounded out Wednesday's session on firm footing as familiar themes of the war premium and stock weakness helped sustain a bid this week. There was some vague talk of an easing bias from the Fed, perhaps as Bush's tax cut proposals failed to get much traction with The Washington Post-ABC survey participants. Risk events next week, including U.N. inspection findings Monday, Bush's State of the Union address on Tuesday and the FOMC decision on Wednesday all loom as well.
Bush is expected to make evil-doer Iraq his main topic, though he won't reveal a smoking gun or a war time-table -- themes already echoed Wednesday in his Missouri speech. Also, the flight bid grew after Russian sources said the U.S. would invade Iraq by the end of February.
On the data front, weekly retail sales figures gained 0.3-0.7%, the MBA Mortgage Market Index fell 4.7% in the week of January 17, thanks to a new year's drop in refinancings. In an ABC News/Money poll, Consumer Comfort fell to new nine-year new low of -27 from -21.
The March bond closed up 20/32 at 111-31, while the two-year note and 30-year bond spread held steady at +324 basis points, and the five-year area outperformed. Corporate/agency supply news was readily absorbed, with GE, Fannie, and Freddie on all deck with deals.