Narrow Overnight

T-Notes operated within the confines of a narrow 0-04+ range overnight, last +0-02+ at 133-20, sticking within the upper echelons of Tuesday's range but off of late NY highs, with cash Tsys bear steepening as 30s cheapen by ~1.5bp. The modest pressure comes against the backdrop of an uptick in both e-minis and the major Asia-Pac equity indices, which are likely drawing some support from the adjustment to the Biden administration's COVID vaccination timeline guidance (all adults should be able to receive their first COVID vaccination shot by the end of May) and suggestions from the analytic community re: the potential for the PBoC to conduct a targeted RRR cut in March.

• As a reminder, Tuesday saw the space draw some late support from comments made by San Francisco Fed President Daly, after she noted that although she is not worried about the yield curve at present, the Fed has the tools to deal with any issues if such worries were to arise, including changing the composition of its asset prices. Daly noted that something like operation twist would be "a first tool" because of some of the drawbacks associated with yield curve control, although she wouldn't completely discount the possibility of employing the latter. Earlier in the day Fed Governor Brainard had noted that she is playing close attention to market developments, with last week's move in Tsys catching her eye. The wings of the curve were little changed come the bell, while 5s richened by the best part of 4bp as the belly continued to unwind some of last week's underperformance. Tuesday saw J.P.Morgan close their long 5-Year Tsy trade recommendation (implemented late on Feb 25), for a quick ~12bp profit.
• ADP employment data and the latest ISM services survey headline the local economic docket on Wednesday, with Fedspeak from Bostic, Harker and Evans also due.