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Bear Flattening With Powell Ahead

  • Cash Tsys sell-off through the London session as rate hikes are priced back in after yesterday’s sizeable rally, led by the front-end for a decent-sized bear flattening.
  • 2YY +5.6bps at 1.396%, 5YY +4.4bps at 1.638%, 10YY +2.2bps at 1.750%, 30YY +1.5bps at 2.121%.
  • 2YY sit 23.5bps below post US CPI highs but nevertheless 2s10s is down to just 35bps, the flattest since March 2020 and approaching a 76.4% retracement of the 2019-2021 steepening.
  • TYM2 sits 15 ticks lower at 128-08+ on modestly above average volumes after yesterday’s huge volumes. Resistance is eyed at 128-23 (Jan 13 high).
  • Fedspeak: Powell testifies before the House Panel at 1000ET (no confirmed time if a text will be pre-released, it wasn’t last night), with both Evans (2023 voter) at 0900ET and Bullard (2022) at 0930ET beforehand. NY Fed VP Logan speaks on asset purchases (1630ET).
  • Data: ADP employment for Feb (0815ET) as a prelude to Friday’s payrolls with the Beige Book later (1400ET).
  • Bill issuance: US Tsy $35B 119D-Bill CMB auction (1130ET).

US 2Y and 10Y yields plus 2s10sSource: Bloomberg

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