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Choppy Day For Few Surprises From Fed Chair Testimony

US TSYS SUMMARY
Choppy session for rates and equities, Tsy yields mixed, 5s30s curve making new high (162.463H, Aug 2014 levels) while equities manage to recover from broad losses to mildly higher (ESH1 -1.8% midmorning to +.26% by rates close).
  • Not much react to data: Feb consumer confidence better than exp: 91.3 vs 88.9 in Jan; DEC CASE-SHILLER SEAS ADJ HOME PRICE INDEX +1.3% M/M. Focus more on Fed chair Powell's semi annual testimony on economy to Sen Banking Comm -- though few surprises revealed.
  • Tsy futures had started to reverse modest gains prior to Powell's testimony, support evaporated ahead the risk event coupled w/bounce in equities (weaker levels helped kick off bounce in Tsys in the first place). Some had hoped yield curve control would have been mentioned spurred sharp duration sell-off to new session lows (10YY 1.3875%H; 30YY 2.2144%H). Powell dismissed n/t inflation concerns, cautiously optimistic on outlook, has tools to keep funds rate in range. Stated central clearing and "digital dollar" being looked at.
  • Heavy volumes tied to massive rolling of March to June, latter takes lead quarterly Friday (TYH/TYM>2M, >50% March volume by the close).
  • US Tsy $60B 2Y Note (91282CBN0): draws 0.119% high yield (0.125% last month) vs. 0.118% WI, bid/cover 2.44 vs. 2.67 previous. Corp issuance hedging in the mix.
  • The 2-Yr yield is up 0.4bps at 0.1149%, 5-Yr is down 2.1bps at 0.5777%, 10-Yr is down 0.5bps at 1.3602%, and 30-Yr is up 2.4bps at 2.1972%.
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