With better than expected economic news reported last week, there was less enthusiasm for Treasurys, which, ironically, just became very popular after the Federal Open Market Committee eased rates again the week prior. The market seems to be in a wait-and-see mode, analysts said.

"When the Fed eased, it seemed everyone came up with reasons why they should own Treasurys," said Kevin Jackson, senior analyst at RBC Dain Rauscher. "Now it seems like everyone is trying to find reasons why they should not hold Treasurys. The least bit of economic news creates jerky reactions."

This was shown last Thursday morning when the market was selling-off in response to better than expected economic releases. Retail sales, for instance, were unchanged from October after they were expected to drop by 3%. The market, experts said, is clearly looking for direction.

"The market is pretty much in a range now and it would respond to the events and news about the economy," said Yubo Wang, a mortgage strategist at Morgan Stanley. "We would need to have more clarity in several dimensions."

These factors, he noted, would be the state of the economy, the equity market outlook, corporate market profitability, as well as issues with Iraq and terrorism concerns.

Jackson wrote that maybe the market was expecting more from Alan Greenspan's speech last Wednesday. Expectation was that Greenspan was going to be more upbeat.

However, observers were disappointed. "Maybe the most interesting aspect to Mr. Greenspan's testimony is its lack of length," said Deutsche Bank senior economist Joseph LaVorgna last Wednesday. "At slightly less than three pages long, Mr. Greenspan discussed why the Fed decided to cut rates, slower household spending, a lack of a meaningful pickup in business spending and wider risk spreads. Nevertheless, these factors were discussed in the context of the economy hitting a soft patch.'"

LaVorgna added that Greenspan's speech sounded like other recent Fed commentary.

Other analysts said that Greenspan has a reputation for talking around issues to avoid sending mixed signals to the market. Indeed, observers agree that the level of discomfort remains high not only for the Fed but also for consumers.

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