11:09 AM
Bounce: Bonds went on a run higher as the market flipped following data and falling stocks. The market apparently had a delayed reaction on the confidence drop and flat inventories report, which helped offset the retail sales jump. The curve was swung steeply flatter with the short end lagging and the 2-10-yr yield spread near 275 versus 284 and change mid-week. The 10-yr saw a run to 3.71% from 3.75% with an eye on the 3.695%, but size has slowed since the initial bump better and may need some new news to get it over the hump. Some weak shorts got clobbered on run with futures players reporting some momentum while implied volatilities also got a boost as the long end led the charge.

10:16 AM

Run Up: The market was trying to get back some ground with the drop in the UofM sentiment countered some by an uptick in 1-yr inflation expectations (5-yr flat). Business inventories was a nonevent and the market will continue to find reason to lean on prices with the global growth picture looking better in general while price pressures, for the most part, remain tame. The curve has been swung flatter with the shorter end deteriorating faster. The 2-10-yr yield spread is running near 276.5, while the 2-yr is offered off to its worst level in 2 months. The market jumped over the past few minutes with the 10-yr running to a 3.719% yield from 3.75% in a straight line and the 30-yr saw 4.645% from 4.675%.

09:49 AM
Leaned On: The market has slowed and is pulling back in pained trade ahead of the sentiment report. The market will be looking for any excuse to sell as the day's attitude is all about global recovery, even as the recovery is in recovery. The market will be watching for any upticks in inflation expectations for another reason to pressure prices

09:08 AM

Edging Back: Treasuries are sneaking back a bit from the initial sell-off following the boost to retail sales. Appliances and electronics saw the best bump in a year at 3.7%. BBH's Chandler notes teh report was "much stronger than expected, even when taking into account the downward revisions in January. A picture of a broadening of the recovery is emerging...Combined with yesterday's news of a smaller US trade deficit and Canadian figures, including today's Canadian employment (even discounting the Olympic effect), the strength of the North American economy is evident."

08:47 AM

Boom: Retail sales were able to post a positive print as opposed to the anticipated -0.2% drop, while the jump ex-autos was a solid 0.8% and the 0.9% showing in the component excluding autos and gas station input. The market was slammed on the initial print with the 10-yr swinging the yield up to the 3.775% point from 3.729% ahead of the report. Trade should recover some fairly quickly as the data gets broken down and trade settle is for the sentiment report.

08:30 AM
Offered: Treasuries are on offer ahead of data with the market shrugging off the run of solid to stellar auctions in a return to risk as data and troublesome countries improve. The 10-yr is pushing at 3.75% and the worst levels since late Feb. Global bonds are mostly lower with EuroLand data and talk of yet further added supply to aid Greece. The curve has been swung from a flattening track to a steeper bent as positions are squared ahead of data with the 2-10-yr yield spread now 278 from near 276. The dollar was given added pressure, off to the lowest on the index since Feb 17, as the euro finds its way through 1.3680 to run at 1.38. The yen is on offer as riskier plays gain attention. The day’s data may offer some action, but there will be a toss up if a worse retail sales report will be trumped by the potential improvement in sentiment. retail sales (8:30), while the UofM sentiment number (9:55), while business inventories hit late (10).

06:32 AM
The 10-yr Note is off its best levels of the morning and is trading flat while equities have moved into positive territory. The dollar index is weaker ahead of February Retail Sales. The yen was close to a two-week low vs the dollar before recovering; it is now stronger vs the dollar. The BOJ meets March 16-17 to discuss further monetary easing measures. The euro strengthened vs the dollar. Retail Sales for February are due at 08:30; consensus calls for -0.2%. At 09:55, UofM sentiment data is due; consensus calls for 74.0. There are no auctions today. The 2-10-yr yield spread is 278 vs 277.2 from yesterday afternoon.

04:22 PM

Split Ends: Treasuries were mixed, with the long end finding a bid while the shorter stuff was under pressure, The market rolled through the last on the auctions and, even after a run of decent offerings, the 30-yr was still a standout. Buyers came in hard for the offering, pushing the yield off to 4.679%, well below where it was expected and a virtual 30-yr bargain for Uncle Sam. The indirect bidders take was a little light, but it was made up for by a record take by direct buyers, who picked up nearly a third of the offering. Direct bidders, or "patriots" as one player jokingly refers to them (although of what nation it is hard to say), confound dealers as the market likes to have a better handle on who is getting how much of what. The new fixation is likely to continue to be a large part of future auctions, if which, there will be none in the US until the week of the 22 nd. The curve was wound well flatter into the auction, but picked up some speed once the issue was done with the long end pushing yields lower while the shorter pushed prices lower or were flat. The 2-10-yr yield spread was off to the week's flattest running 277.2, but remains not far form historic steep levels, so there should be room for further tightening. The dollar was traded lazily, with the euro repeatedly banged up against the 1.3680 point, unable to make a go of it and sitting in a range. The yen was also ultimately range bound, and headed into the end of the session near 90.60 near the week's lows. The day ahead has one big ticket item, retail sales (8:30), while the UofM sentiment number for Mar may have some impact (9:55), business inventories should have little effect (10).

06:39 AM
The 10-yr Note is at its worst levels of the morning. Equities have recouped earlier losses and are looking at a flat to slightly negative open. The euro was flat vs the dollar. The yen was flat following news that Japan's economy grew less than initially estimated in 4Q09. Continuing Claims for 2/27 and Initial Claims for 3/06 are due at 08:30; consensus calls for 4500K and 460K. $13 bln in 30-yr Bonds will be auctioned. The 2-10-yr yield spread is 282 vs a yesterday afternoon level of 281.5.