EM LATAM CREDIT: Argentina: USD10bn IDB Financing - Positive

Option desks reported light SOFR & Tsy option flow Monday, mixed flow as underlying futures retreated from early session highs. Underlying futures trade weaker but off late overnight lows, projected rate cut pricing has cooled vs. morning levels (*) as follows: Jun'25 at 0.0bp, Jul'25 at -3.1bp (-4.1bp), Sep'25 at -17.4bp (-18.4bp), Oct'25 at -30.6bp (-34.9bp), Dec'25 at -46.4bp (-46.9bp).

• SOFR Options:
  • Update, total 20,000 0QZ5 96.75/97.00/97.50/97.75 call condors, 6.0 ref 96.72/0.05%
  • Block, 5,000 SFRV5 95.75/95.93/96.50 broken call trees, 2.5 net ref 96.125
  • +4,000 0QV5 97.00/97.50/98.00 call flys, 5.5 vs. 96.695/0.10%
  • +5,000 0QN5 96.75 calls, 8.5 ref 96.62/0.38%
  • -1,500 2QZ5 96.50 straddles, 61.0-60.5
  • 1,000 SFRU5 95.87/96.06 2x3 call spds, 1.25
  • 3,000 SFRU5 95.37/95.62 put spds, 0.5 ref 95.88 to -.875
  • 1,500 SFRN5 95.62/95.75/95.87 put flys, 4.5
• Treasury Options:
  • -7,500 TYN5 110.25/112 1x2 risk reversals (-p) vs. 110-22.5/0.41%
  • 1,200 TYQ5/TYU5 110.5 call spds, 16 ref 110-23
  • 2,000 TYQ5 110/111 strangles, 1-19
  • 2,000 TYN5 110.5/110.75/111/111.25 call condors
  • 1,250 TYN5 109/109.5 put spds vs. 111.75/112.25 call spds ref 110-14.5
  • +1,000 TYU5 107/108 put spds 9 vs. 110-21/0.08%

• RES 4: 168.01 High Jul 26 ‘24 
• RES 3: 167.87 2.0% 10-dma envelope
• RES 2: 167.47 61.8% retracement of the Jul 11 - Aug 5 2024 bear leg
• RES 1: 167.22 High Jun 16 
• PRICE: 167.03 @ 17:23 BST Jun 16 
• SUP 1: 164.41 20-day EMA
• SUP 2: 163.33 50-day EMA 
• SUP 3: 162.80/161.78 Low Jun 3 / Low May 26 
• SUP 4: 161.09 Low May 23 and key support   

The trend set-up in EURJPY remains bullish and the cross has delivered a fresh cycle high once again, today. A key resistance at 165.21, the May 13 high, has been cleared, strengthening bullish conditions that confirms a resumption of the uptrend and opens 167.47, a Fibonacci retracement. Key short-term support lies at 161.09, the May 23 low, where a break is required to highlight a reversal. First support is at 164.41, the 20-day EMA.  

• Stocks rebounded from last Friday's sell-off, reacting positively early Monday to headlines that Iran is hoping intermediaries will pressure Israel to a ceasefire in return for "flexibility in nuclear negotiations" with the US.
• The early risk appetite abated as the two continued to bombard each other, Iran stating they are "ready to deal a major blow to Israel". Of note, crude prices remained weaker after late last week's spike higher (WTI -1.34 at 71.64).
• Currently, the DJIA trades up 283.05 points (0.67%) at 42480.07 (42707.73 high), S&P E-Minis up 53 points (0.88%) at 6084.5 (6055.25 high), Nasdaq up 264.1 points (1.4%) at 19670.82 (19733.31 high).
• Information Technology and Communication Services sectors continued to outperform in the second half, Advanced Micro Devices +9.20%, Teradyne +5.46%, ON Semiconductor +5.15%, Monolithic Power Systems +5.11% and Super Micro Computer +4.98% buoyed the IT sector.
• Leading gainers in the Communication Services sector included Warner Bros Discovery +5.63%, Take-Two Interactive Software +3.45%, TKO Group Holdings +3.41% and Meta Platforms +2.91%.
• Energy and Utilities sectors underperformed on the back of weaker crude prices: Diamondback Energy -3.03%, APA -2.43%, ONEOK -2.20%, Occidental Petroleum -2.11% and Targa Resources -2.08%. Meanwhile, Consolidated Edison -2.82%, NextEra Energy -2.26%, DTE Energy -2.03% and CMS Energy -1.69%.