Eurodollar/Treasury Roundup, Risk-On Ahead Wed's ADP

Risk appetite gradually improved Late Tuesday, after StL Fed Bullard continued to downplay chances of a 50Bp hike in March.

• Stocks made decent gains after FI close, SPX eminis on highs and through 20D EMA at 4540.0 (+45.25) high. Top sectors leading Energy (+3.4%), Materials (1.65%) and Financials (+1.52%).
• Tsys finished weaker, after paring early session gains, yield curves rebounding from early flattening amid decent buying in short end including +15k TYH2 Block at 108-09.8. Trading desks reported foreign real$ buying in 3s, two-way in 5s from central banks and leveraged$, short end steepeners in 2s vs. 3s and 5s.
• Large flattener blocks in the long end eary in the session included 10s and 30s vs. 30Y ultra-bonds.
• Eurodollar and Treasury options saw decent unwinds in crowded March rate-hike trades as active spec accounts looked for better opportunities in longer expiries. Salient trades: paper sold over -80,000 short Mar 98.50/98.62 put spds at 8.5 vs. 98.42/0.12%; in Treasury options: -16,000 TYH 127/129 put over risk reversals, 1 vs. 128-00.5/0.49%.
• Data highlight for Wednesday: ADP private employment figures ahead the NY open, potential insight ahead Fri's Jan NFP (+150k est vs. +199k in Dec).
• The 2-Yr yield is down 1.4bps at 1.1651%, 5-Yr is up 1.3bps at 1.6226%, 10-Yr is up 2.2bps at 1.7982%, and 30-Yr is up 1.7bps at 2.1244%.