Data was pretty scarce, with weekly retail sales moderately higher, while consumer credit rose more than $7 billion, or 5%. Talk of hedge-related selling -- thanks to the surge in corporate issuance -- also dominated early on. The front-end of the curve underperformed for a change on profit-taking on steepeners, with the 2-year note and 30-year bond spread closing 4 basis points narrower at +334 basis points.
There were reports of bearish purchases of puts on August Fed fund futures as well, though this appeared to be more a position-driven rather than policy-motivated move. The 10-year note continued to be squeezed in a very tight repo market, trading near 0%, meanwhile the Treasury called for dealer position reports on the issue.
The September bond traded as much as a half point lower, but pared its loses by the close to -8/32 and 115-02. U.S. swap and agency spreads widened, while the dollar finished in the middle of its firmer range.