TYH2 Little Changed At Re-Open

TYH2 marginally above late NY levels, last +0-02+ at 126-02, after finishing a little above worst levels on Monday.

• To recap, the lack of outright escalation re: the Russia-Ukraine situation allowed Tsys to cheapen on Monday. Momentum was aided by what appeared to be a bit of a staged television address by Russian President Putin & Foreign Minister Lavrov, with the two agreeing on the need for continued diplomatic talks with the west re: the situation.
• It wasn’t all one-way trade, with an apparent dose of sarcasm from the Ukrainian President (a former comedian) re: the prospect of a Russian invasion on Wednesday briefly supporting core FI markets. This also came at a time when reports were doing the rounds re: the movement of Russian military vehicles into an attack formation.
• Fedspeak saw ’22 voter Bullard reiterate his hawkish communique from last week. Meanwhile, fellow ’22 voter, Kansas City Fed President George, told the WSJ that the central bank should consider selling bonds from its $9 trillion asset portfolio to address high inflation and guard against harmful effects that can result from raising short-term rates above long-term rates.
• Ultimately, cash Tsys were 7.5-5.0bp cheaper across the curve, with 2s leading the way lower as the curve bear flattened.
• The PBoC’s latest 1-Year MLF operation headlines the Asia-Pac docket on Tuesday (16 of the 27 surveyed by BBG look for the rate applied to the use of the facility to be left unchanged, while the remainder look for 5-10bp of cuts). NY hours will see the release of U.S. PPI data and the Empire Manufacturing print.