SECURITY: Trumps Indicates Support For Kurdish Offensive In Iran

• Still weaker - Treasury futures bounced briefly after Rtrs headline that an Iranian drone approached US aircraft carrier in the Arabian Sea and was shot down.
• TYH6 trades back to 111-18 (-1) after rising to 111-19.5, stocks extend lows (SPX eminis -70.0 at 6932.25), crude reported bounced as well.

Axios reporting that Iran is demanding changes to the location and format of Friday's tentatively scheduled nuclear talks with the US in Turkey, aimed at averting military conflict between Iran and the US. According to the report, Tehran wants the talks moved to Oman and take place in a bilateral format without observers from Turkey, Egypt, and Qatar. 

• Axios notes, "If the new demands scupper Friday's talks, they risk pushing President Trump off the diplomatic path and toward the military option at a time when he has already assembled enormous firepower in the Gulf."
• The report appears to support a recent WSJ report which stated, "Iranian officials threatened to withdraw from talks with U.S. special envoy Steve Witkoff and President Trump’s son-in-law Jared Kushner that were poised to take place Friday in Turkey, people familiar with the matter said."
• Axios reported earlier that Israel, which had initially opposed limited US strikes on Iranian sites, “has shifted,” with a “succession of Israeli spies and generals” briefing US counterparts in favour of strikes. 
• Defense Secretary Pete Hegseth told reporters yesterday, “The President’s been clear from the beginning... Iran will not have nuclear weapons capability. And so they can either negotiate on that front, or we have other options—that’s why the War Department exists.”

• US TSY TO SELL $105.000 BLN 4W BILL FEB 05, SETTLE FEB 10