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Stocks at New Highs, Shrug Off Vaccine, Geopol Risk Factors

US TSYS SUMMARY
Busy session Tue as early vaccine headlines and geopolitical tensions overshadowed much higher than expected CPI (CPI 0.6%, CORE 0.3%; CPI Y/Y 2.6%, CORE Y/Y 1.6%).
  • Sharp risk-off move ahead of the NY open: Tsys gap bid, equities reversed course traded lower on J&J headlines that US calling for pause in J&J vaccine due to blood clotting issues. Vaccine headlines dominated the first half while Russia/US geopol angst plays close second amid following:
  • Russia warns U.S. warships to steer clear of Crimea 'for their own good', Rtrs
  • NATO demands Russia end Ukraine build-up, West examines options, Rtrs
  • RUSSIA'S TAKING MEASURES IN RESPONSE TO NATO'S THREATS, Bbg
  • Rates and equities gradually recovered by midmorning into the second half when Bonds surged after a strong 30Y auction Re-Open: Yield curves whipped around as short end reversed earlier steeper levels to flatter post auction, 5s and 10s vs. 30s holding steeper. 30Y R/O drew high yld of of 2.320%. Stop through of 1.5bp well above five auction avg of only 0.1bp, topping last Dec's 1.2bp stop. Bid-to-cover 2.47x well above 2.34x five auction avg.
  • Equities shrugged off the exogenous risk factors in the second half, S&P eminis making new all-time high of 4139.75.
  • The 2-Yr yield is down 0.8bps at 0.1589%, 5-Yr is down 4.2bps at 0.8386%, 10-Yr is down 4.2bps at 1.6233%, and 30-Yr is down 2.6bps at 2.3077%.
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