Weaker On Fiscal Deal Optimism; FOMC Eyed Later

Treasuries are off overnight highs, with a Washington fiscal stimulus deal finally appearing to be within reach, and the FOMC decision coming this afternoon.

• TYs have traded basically within Tuesday's ranges, briefly going through yesterday's low but holding. Mar 10-Yr futures (TY) steady at at 137-27.5 (L: 137-25.5 / H: 138-00.5)
• Modest bear steepening in the curve: 2-Yr yield is up 0.6bps at 0.119%, 5-Yr is up 0.8bps at 0.3718%, 10-Yr is up 1.2bps at 0.9196%, and 30-Yr is up 1.8bps at 1.6682%.
• Dollar's been weakening and equities rallying pretty much the entire overnight session. Positive Brexit deal headlines and Eurozone PMI beats have boosted the tone.
• Politico's Jake Sherman tweeting at 0442ET that he is "pretty confident that there will be a stimulus deal reached in the next 24 hours". This comes after bipartisan meetings Tuesday after which Senate's McConnell said he was optimistic on completing "an understanding sometime soon".
• Solid data slate, with Nov advance retail sales at 0830ET, and prelim Dec PMIs at 0945ET.
• Later of course is the Fed decision at 1400ET, with the Powell presser a half hour later.
• In supply, $55bn of 105-/154-day bills sell at 1130ET; no NY Fed operation (due to FOMC meeting today).