Hopes for an elaboration on the policy outlook were dashed by a typically enigmatic speech favoring a flexible "risk management" policy approach in contrast to a more rigid inflation target. The market overcame the bearish firm data, however, helped by month-end index duration extensions after the record refunding. This mainly helped prices cull their data-led losses ahead of the early close and offset some bearish call selling against October and December 10-year notes.
The September bond finished 6/32 in the red at 107-13, well above session lows of 106-30. The 2-year note and 30-year bond spread steepened one basis point to +326 basis points. The dollar had a soggy session after it was revealed the Bank of Japan did not intervene in August and gold hit the highest level since February.