Treasuries managed to end yesterday's session in positive territory after treading water for much of the day as market participants braced for crucial economic reports.

Despite the market's cautious tone, a late afternoon short covering spree lifted prices across the curve. The 30-year bond closed unchanged at a yield of 7.58%, while the two-year note ended up 3/32, to yield 6.15%. Healthy bidding at the second leg of the Treasury's August refunding gave players reason to cheer yesterday. The 10-year note auction, which was widely thought to be the most difficult issue to sell, met with decent demand and encouraged participants that buyers are coming back into the bond market.

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