Calm Before The Storm?

TYH2 operating around late NY levels, last +0-01+ at 128-14, just shy of the contract’s NY peak.

• •To recap, cash Tsys finished Tuesday ~1.0-2.5bp richer, with some light bull flattening in play.
• •3-Year Tsy supply was well received, stopping through WI by 0.4bp, with the cover ratio holding steady around its recent averages as dealer takedown slid comfortably below its own recent averages.
• •The space looked through Fed Chair Powell’s latest testimony on the hill, while hawkish comments from Mester, George & Bostic (pointing to the potential for a March rate hike/more aggressive balance sheet run off) had little impact, given the recent hawkish Fed repricing and adjustments in sell side views.
• •Flow of note included TU block buyer (+20.570) in the wake of the aforementioned 3-Year auction, in addition to TU (+9.0K), TY (+9.0K) & UXY (+5,750) block buys earlier in the session, which helped underpin during NY trade..
• •The space was less reactive to the continued brisk IG$ issuance (when compared to last week).
• •December’s CPI data headlines the NY docket on Wednesday, with average hourly earnings also due. Supply comes in the form of 10-Year supply Tsys, Fedspeak will come from Minneapolis Fed President Kashkari (’23 voter, dove). Chinese CPI data will cross during Asia-Pac hours, but shouldn’t be much of a market mover.