While the short end lagged the move all day, buying slowly worked its way down the curve, with the 2-year finally closing at a 1.75% yield. Flight to quality added to bullish technicals, especially as details of the U.N. bombing generated some defensive posturing in stocks. The price gains triggered buy stops to extend the rally.
Adding support to Treasuries was an overnight report that the Taiwan central bank would not follow other central banks in either limiting their demand for, or actually selling off their substantial holdings of Treasuries. News that a top Wall Street strategist also upped his allocation to Treasuries by 5%, out of cash, supported. Stronger than expected housing starts data, up 1.5%, did not get in the way of bulls. And there was little reaction to the dip in consumer confidence to 90.2 from 90.9.