Flat Re-open After Two-Way Thursday

TYM2 is operating around late NY levels after turning bid into the bell as the Pentagon warned that Russian President Putin may make nuclear threats if the Russia-Ukraine conflict drags on. The contract is last +0-08 at 124-18+.

• To recap, the curve twist steepened on Thursday, with the early bull flattening unwound as corporate issuance helped cheapen the long end. A bid in equities and widening TIPS also helped pressure the space away from best levels before the Pentagon worry was known. 5s outperformed on the curve come the bell, richening by nearly 4bp, while 20s and 30s cheapened by ~2bp.
• A cautious BoE rate hike, the impact of the Fed’s dot plot (U.S. growth worries/lower long term dot), demand for long end paper out of Asia & the Kremlin pushing back against the idea of meaningful progress in the Russia-Ukraine talks had supported the space ahead of NY hours.
• There isn’t anything in the way of tier 1 risk slated for Asia-Pac hours, with the latest BoJ monetary policy decision expected to be a bit of a non-event. Meanwhile, Friday’s NY session will be headlined by Fedspeak from Barkin, Bowman & Kashkari. The U.S. data slate is slim, with existing home sales due. Elsewhere, U.S. President Biden is set to speak with Chinese counterpart Xi.