2yy ahead of FOMC ...
Looks to me that 2yy are approaching (hit) a short-term TLINE (95bps) and a break below it (supported by momentum still correcting), isn’t impossible
And the reason I’m jotting this down is given the following quick hit from BBG,
Powell’s Press Conference Is Key for Newly Minted 2-Year Longs
A plunge in stocks and rising geo-political angst ahead of this week’s Fed policy meeting, as expected, inspired tactical demand for 2-year notes. But whether or not those new auction longs stay intact will depend on what Fed Chair Powell has to say at the central bank’s press conference Wednesday afternoon. It’s hard to envision after the December inflation pivot, but there may be some investors who think Powell will be dovish given global risks and a correction in stocks. A softer tone on rate hikes could allow shorter-dated Treasuries to outperform the long-end while a hawkish tone may have the opposite effect and lend to more narrowing between yields on active Treasury issues. The latter could possibly disrupt those new 2-year longs. Among the bidders for 2-year’s today, indirects, often associated with foreign accounts, were awarded the most since 2009. Bid-to-cover was the highest since April 2020. Dealers were caught a bit short after being awarded 24.6%, below the 6-month average of 26.3%. Ahead of the sale, dealers reported lots of customer demand in 2-years outright and fast money demand on the roll. The roll had steadily narrowed to 3.375 from 4.56 on January 20 mostly amid fast money demand.
SIDEBAR … DISTRACTION here … WHY on this earth, just a couple days before head hawk takes the mic, would foreigners buy 2s? Oh, right, the answer it turns out, was offered even BEFORE this afternoons 2yr auction in the form of what happened while we slept.
Who’d a thunk it?
Tomorrow’s liquidity event (aka 5y auction) is equally as important.