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Eyeing Stimulus, Both Fiscal And Monetary

US TSYS SUMMARY

Very subdued trading in Tsys overnight, running about half normal volumes in TYs (~130k) and in a 4.5 tick range. Some modest downward pressure prevailing as equities rise from the lows.

  • Mar 10-Yr futures (TY) down 1.5/32 at 138-01 (L: 137-31.5 / H: 138-04). The 2-Yr yield is up 0.2bps at 0.117%, 5-Yr is up 0.5bps at 0.3623%, 10-Yr is up 0.5bps at 0.8981%, and 30-Yr is up 0.4bps at 1.6329%.
  • Sideways trade befits uncertainty over stimulus, both fiscal and monetary. Current status on the $908bn COVID relief bill: there's bipartisan support for $748bn of it, but the remaining portions focus on the most contentious issues, namely state/local gov't aid and liability protection.
  • Negotiations ongoing to get it all together later this week. Meanwhile, text of $1.4bn omnibus spending package due today.
  • 2-Day FOMC begins this morning - our preview went out Monday (let us know if you haven't seen).
  • Data includes Empire State Manuf (0830ET) and Industrial Production (0915ET).
  • In supply, $60bn of 42-/119-day bills sold at 1130ET. NY Fed holds two purchase operations today: ~$8.825bn of 2.25-4.5Y Tsy, followed by ~$3.6265bn of 7-20Y Tsy.
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