Turn Around Thursday

TYH2 +0-00+ at 126-15+, in line with late NY levels.

• Thursday was extremely busy. Russia’s special military operation in Ukraine supported the space during Asia-Pac hours, with the bid holding into early NY dealing. The space then started to pull back from extremes. A recovery in equity indices (after a sharp leg lower at the cash re-open), coupled with a delay of Thursday’s Fed purchase operations (owing to technical issues, rescheduled for Friday) allowed the space to pull back from best levels
• As we moved through the day it became apparent that U.S. President Biden would hold off from revoking Russian access to the SWIFT payment system, while he continued to stress that U.S. troops will not be deployed to Ukraine. This gave the recovery in risk appetite some extra legs, with the major equity indices managing to close comfortably higher. Cash Tsys were 0.5-3.5bp richer at the bell, as the belly outperformed, with yields comfortably back from the day’s lows.
• 7-Year supply stopped through WI by 1bp, with the cover ratio unchanged vs. the prev. auction, holding just above the recent auction average. Dealer takedown slid to multi-year lows, rounding off a strong week for Tsy supply, with cuts in auction sizes and geopolitical tensions supporting demand.
• Futures roll activity provided a further boost to volume.
• Looking to Friday, the latest round of PCE readings, durable goods data, pending home sales & UoM sentiment survey will all cross. We will also get Fedspeak from Waller.