ISRAEL: 60k To Be Called Up For Gaza City Op That Could Start Within Weeks

Aug-20 08:08

The Israeli gov't is reported to be reviewing the prospective ceasefire deal put forward by Qatar and Egypt and agreed to by Hamas on 18 August. Initially, PM Benjamin Netanyahu was reported to have been 'dismissive' towards the prospect of a truce being reached. The Times of Israel, though, claims that "Two Israeli officials said Tuesday that Jerusalem is studying the hostage-ceasefire proposal accepted by Hamas, and that Netanyahu is expected to convene discussions about it soon. A response is expected in the coming two days, said a Palestinian source close to the talks." 

  • The 'Witkoff proposal' on which the current deal is based envisages a 60-day ceasefire in exchange for the release of half of the remaining living hostages. During the period, talks on a permanent truce would get underway. Gov't figures have forcefully claimed that a ceasefire is only possible with the release of all hostages.
  • The gov't has also overnight approved plans to call up tens of thousands of military reservists for the full military encirclement and occupation of Gaza City and central Gaza. Letters will be sent out soon to 60,000 reservists to be called up on 2 September, with another 20,000 having their service extended. An estimated 100k reservists are expected to be drafted during the operation.
  • A full military takeover of the Gaza Strip would likely be a months-long operation. It is unclear whether, once started, the gov't will be willing to halt, even if a favourable ceasefire deal is presented, given Netanyahu's stated intention to eliminate Hamas. 

Historical bullets

EGBS: J.P.Morgan Recommend OLO Longs Vs. OATs & Bunds On Fly

Jul-21 08:06

J.P.Morgan recommend longs in 10-Year OLOs on an evenly weighted France/Belgium/Germany 10-Year butterfly.

  • They suggest that Belgian paper is likely to richen on this structure as they “expect the market to price increased political uncertainty and associated rating downgrade risks for France as the 2026 budget discussion picks up”.

US TSY OPTIONS: TYU5 112.50 Calls Lifted

Jul-21 08:03

TYU5 112.50 calls vs 111-03, paper paid 0-17 on 30K.

ECB: ECB Speak Wrap (July 7 – July 21)

Jul-21 07:57

For the full publication, click here.

The volume of ECB speak has reduced notably since our last update two weeks ago. The main development since then has been US President Trump’s threat of 30% tariffs on EU exports from August 1. However, Reuters sources suggested that while this threat has “complicated” decision making for the ECB, it is not likely to “derail plans for a pause in rate cuts” at this Thursday’s decision. 

  • Market pricing remains consistent with one more 25bp cut this cycle, which is in line with the implied rate curve embedded within the ECB's June macroeconomic projections.
  • However, the Governing Council is appearing increasingly divided as to whether more easing is justified at this stage, and even if another cut is warranted, whether it should be delivered in September or later in the year.