Issues: Credit Suisse NY launches $1.5 bln 5-yrs (est +112.5) - Reuters/IFR

Low: Trade is leaking lower with the 10-yr sitting on the lows with the 3.684% area likely to hold on the 10-yr. The curve has been spun back to a steeper spread on unwinding, but the sentiment still decidedly on the flatter track. Traders are seeing the market under pressure through the auctions, which, while likely to go well enough, are hitting in a pretty crowded environment. The upside is that the shorter dated issues are generally considered an easier sale than the lengthier offerings, pointing to the auctions out of Spain, where "the sale of 30-year Spanish paper was less well received and raised some concerns for sovereigns which this year are seeking to issue more ultra-long dated bonds..."The 10-year was better than the 30-year (for Spain)...But overall, the auction sizes today were large and Spain got it away. Admittedly both bonds gave a good concession before the auction," said David Keeble...at Credit Agricole" - Reuters

Offered: Treasuries were sold off with global bonds generally riding along as data and government actions add to an improving economic outlook, while supply continues to weigh. The 10-yr was swung to tap 3.675% from pre-data 3.615%, getting added momentum on the upside surprise on Philly Fed, while chatter on discount rate hikes didn't help. The day's data was mixed put generally better, while Greece headlines and a renewed rally in stocks offered drag. Treasury announced an, as expected, at-record sized, auctions for next week in the 2-5-and-7-yrs, while global offerings crowd the scene. The curve continued to push flatter to levels last seen at the start of the year with the 2-10-yr yield spread 271. The dollar was able to tap the 80.44 point as the index popped and the euro collapsed, on rate chatter and Greece. The regional currency slid off to 1.3587, the worst in a week while also losing ground on the yen. The was able to pull better to get back to 900.20 from 90.80. (Apologies, this posting got stuck and was originally to go up at 13:50)

Issues: JPMorgan launched $1.5 bln 10-yrs (est +237.5)and $1.2 bln reopnened 5-yrs (est +110)

Shell International Finance  launched $2 bln 3-yrs (+42), $1.25 bln 10-yrs (+77), and $1 bln 30-yrs (+95)

Hartford Financial offering $300 mln 5-yrs (est +165), $500 mln 10-yrs (est +190), and $300 mln 30-yrs (est +210) - Reuters/IFR

Buck Bid: The dollar has been backing off its late run as the improved ("improved") data with the drop in the new jobless claims, with the 4-wk average off to 471,250 from 475,500, but continuing claims were bumped higher, with some seeing the tamer fluctuations a sign of "a stabilizing labor situation." The market is still suspicious of these reports of late as weather and an ever changing set of rule around joblessness have troubling effects, leaving the number somewhat murky. The index has been able to run up and tag 80.44, but was unable to hold, backing off to tick around under 80.30 (see 11:34 comment). The euro continues to get drag on Greece issues, with the regional coin dropping off to 1.3587 in the wake of Wed's run at the 1.3820 level while getting dunked top its lowest in a week on the yen, sliding to 122.85. The yen tumbled early on the buck following data, but some safety buying brought it back to give up 90.20 per from a brief stop at 90.80. Gold was flipped from being offered to get a run back better on an uncertainty bid, as rumors on discount rate hikes whatnot floated around, with spot 1125.52 (+5.17). Crude has been offered, trimming its recent rally with inventories higher, 81.91 (-1.02). (Chart art from Jim Schroeder)

Falling: Trade has backed off with the 10-yr tearing through the 3.665% point fairly easily, with the shorter end taking the lead lower. The curve has been on the flatter track and will continue that push, flirting with 2010 narrowest levels after tagging record steeps. The 2-10-yr yield spread has traded 269.9 and is making a move toward 267, where it should run in to some stickiness. The market is getting little help from the move back higher in stocks, while the buck got a run through to near 80.40, but shouldn't get a whole heck of a lot more, 80.45. The euro is taking a hit as the Greek drama adds to drag with the 1.35685 point in sight.

Leaning Lower: The market sticking near the lows in very quiet trade with the 10-yr hanging near the 3.645% yield level while the 2-yr slumps through to Wed's worst levels. The outlook for the upcoming supply, at-record levels of 2-5-and-7-yrs to go off next week were as expected. With Treasury selling $28 bln 3-mos and $29 bln 6-mos Mon, $44B 2-yrs,  Tues, $42B 5-yrs Wed, and $32B 7-yrs Thurs.

Agencies: FHLB sells $3 bln 2-yrs +21

Slip Further: The latest round of data added some drag to prices with the impressive bounce on the overall Philly Fed number, while the inputs were generally not bond friendly. The prices paid component was back to the highest since Sept 08, while the employment input was highest since Aug 07. The curve has resumed the flattening trade while the 10-yr looks to stick around the 3.645% yield level.

Slide: The market has been backed off its initial run to better levels as the market considers supply and the shorter end is dragging. Much of the day will be corrective clean-up, while the curve will dominate the day. Trade has been slow and the 10-yr is wandering around the lows, sticking near the 3.645% point. The data was close to consensus, both of economists and traders, and the next round should offer little. The ongoing Greek drama will help keep a floor under prices, but the crowded issuance calendar will continue to weigh.

Tentative: Treasuries have been clinging to a bid with the long end continuing to lead while the shorter stuff drags. The CPI was inline across the board, while the yoy inputs were lower than expected. The market had pretty much written in the low inflation scenario following the PPI data so the market's cage was papered for these numbers. The 10-yr was able to run up to tap the 3.615% level, back to levels last seen heading into the Feb jobs report. The market has some further data to chew on, but they will need to be well beyond what consensus expectations anticipate to make much of an impact. The lower energy costs while medical care and food continued to ramp up. Trade will be on the defensive with the upside a battle ahead of supply and the drag it adds to the shorter maturities. The curve was initially swung flatter, then unwound steeper, as the as the long end ran harder, but remains on a flattening track with ht 2-10-yr yield spread running 272. The dollar was given a boost with the index trading back through the 80 handle, as Greece continues to slime the euro, which has been knocked off to flirt with 1.3650 while falling on the yen, but currently running flat near 123.40/50. Trade will likely treat the leading indictors and Philly Fed as mere speed bumps unless they show some glaring surprises. Fed-speak will also likely be tame with gov Duke (11:30) and KC's Hoenig, Richmond's Lacker and CLE's Pianalto at an association "summit."

Table of overnight activity in the financial markets.

Long End Run: Treasuries saw added gains as Bernanke and Volcker answered congressional questions while the market wallowed in very thin trade. The 10-yrs got hung up for a bit near the 3.635% point before making a push back to 3.63%, as the long end continues to lead, with the curve action while funds were reportedly doing some short coverage in the longer end. The shorter maturities were dragging and feeling some pressure as the market looks out to supply that starts hitting Tues, with the, likely at-record size auctions announced Thurs. The market is looking for another $44 bln 2-yrs, $42 bln 5-yrs, and $32 bln 7-yrs to be offered up (thank goodness Bernanke stated clearly that everyone, but everyone, would keep right on buying bonds regardless where the yield sits or duration). Options players saw a steady fall in implied volatilities across the curve from Tues as the FOMC got over and done with (PIMCO has reportedly been short forever). The curve was bent back to the flattest levels since the start of the year with the 2-10-yr yield spread ticking to 271. The dollar got a late session bump from early Feb lows with the index moving from 79.50/51 to tap 79.75 while the euro was sent back off to tick around the 1.3740 area, while being pressed lower on the yen to get less than 124. The yen stalled out better near the 90.25 point on the buck. The market will see CPI, initial jobless claims, and current account (8:30), leading indicators and Philly Fed (10). Fedspeak has gov Duke (7:30) and KC's Hoenig, Richmond's Lacker and CLE's Pianalto at an an association "summit"(9).

Bounce: The buck has gotten a solid bounce off the early Feb lows as short coverage pushes through and the euro grinds back off to the 1.3750 area. Trade was getting tweaked early on every Greek related headline while the late action squared into the close. Meanwhile, Bernanke was testifying and saying that rates had been too low for too long and acknowledged the Fed has stumbled. The euro was unable to take out the 1.3780 point, sliding back to 1.3750 while backing off on the yen after running near the best levels since late Feb, ticking through to get under 124 per. The yen is heading back to its best on the week against the buck, pushing toward 90 with an eye 89.92. Gold has been on offer much of the day with spot 1122.25 (-5.45) while crude was held better to settle 82.93 (+1.23), as commodities rallied in general with the CRB index at its highest in a week. (Chart art Jim Schroeder)