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Stoic Treasuries clawed back from overnight losses and finished handily in the green in the face of another strong series of U.S. data. Curious rumors about Fed Chairman Greenspan's premature demise along with stock and dollar weakness helped Treasuries claw back as well.
While the public affairs officer at the Fed would not comment on the rumors, he did confirm to MMS that Greenspan was still scheduled to speak at the Kansas City Fed's conference in Wyoming on Friday. Treasuries had already bucked the firm data trend, then extended gains as the losses in the big-cap technology, drug, and financial sectors shaved about 1% off the major stock indexes.
Durable goods orders gained 1% in July, the second consecutive gain, prompting many to revise up their GDP projections. Consumer confidence surged to 81.3 in August from 77.0 and new-home sales eased back 2.9% in July from record levels.
The September bond closed 22/32 higher at 106-29, well up from 105-14 lows, while the 10-year yield sank back below 4.50% from over 4.60%. The curve was relatively tame, with the 2-year note and 30-year bond spread steepening back out 3 basis points to +337 basis points, despite the $25 billion 2-year auction Wednesday. Stocks rebounded in low volume by the close and the dollar steadied.