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A dull session, despite numerous mixed data, and a poor 10-year auction, reversed on the surprisingly "dovish" FOMC minutes. Treasuries opened firm following bargain hunting and the dollar's bounce overnight. Prices moved higher into New York, as hedge funds, dealers and speculators were light buyers on the open, while technical traders and commodity traders were dominant.
The bid faded as retail sold, inclusive of corporate bond sales of 2-years, 3-years, and 5-years, and a large $1b billion corporate bid list. Interestingly, the news sparked a modest price pullback and a narrow range followed.
Ahead of the 10-year auction prices popped -- short covering on speculation of a strong auction, and hedge fund sales of mortgages ($1.8 billion), vs. buying Treasuries. But poor auction results took prices lower again. However, the "dovish" FOMC minutes caught shorts off guard, and with fresh buying and technicals forced in, Treasuries soared for the balance of the session.