The stronger consumer gauge help propel Treasuries deeper into their corrective funk. There was a little last minute recovery, but after a long corrosive slide traders looking for a little month-end and quarter-end demand to shore up losses were mostly disappointed.
With ISM and factory orders likely to rise early next week the correction could extend until payrolls induces some position squaring. Mortgage-related convexity hedge unwinding also contributed to the downside. The cash bond closed down 12/32 at 112-09, while the 2-year note and 30-year bond spread finished 5 basis points steeper at +321 basis points.
Expectations of another Fed cut slid to about 20% probability. The dollar continued to strengthen, while commodity prices enjoyed a broad-based rally.