SECURITY: Key Remarks From Rubio's Senate Testimony 2/2

• -10,000 FVH6 109-13.25, post time bid at 1049:21ET, DV01 $440,400.
• The 5Y contract trades 109-13.5 last (+1.5)

The Dallas Fed's Manufacturing Outlook Survey showed a dip in activity in December, with the -10.9 general business activity reading (-10.4 prior, -6.0 consensus) representing a 6-month low. This was a weak survey that adds to poor regional Fed manufacturing surveys seen already this month.

• Both production (10-month low -3.2 after +20.5) and new orders (-6.4 after +4.8) pulled back, suggestive of negative output on both a current and forward-looking basis. Shipments fell to a 17-month low and "labor market measures suggested flat head counts and a decline in work hours in December" per the report. That said, conditions were seen to improve in future, with expectations of 6-month ahead activity (+10.8 after +11.0) and production (+34.2 fafter +33.7) remaining relatively steady.
• Respondents' anecdotes were largely pessimistic, citing several ongoing concerns (monetary policy: "We need interest rates to go down further", tariffs: "Tariffs [remain a concern]. I feel like a broken record"; and demand "incoming orders at an all-time low for the first few weeks of December").
• Additionally, price pressures were relatively contained, with current prices paid ticking up only slightly to 36.0 from 35.3; current prices received, as well as the 6-month ahead indices, dipped.
• 4 of the 5 major regional Fed manufacturing surveys (NY, Philly, KC, Dallas) saw deteriorating activity in December vs November, with Richmond the only one to improve. Price pressures were relatively mixed across the surveys but overall remained elevated. 

51,000 wk1 TY 115.5 calls last couple minutes, ref 112-21.5 to -20.5, new position with open interest at 0 - the midcurve options expire this Friday.