US CREDIT UPDATE: AutoNation (AN): 4Q25 Results

Long-dated swap spreads outperform during today’s gilt rally, extending the theme in play since the time of the Budget, with the DMO’s shortening of WAM when it comes to supply driving the outperformance for 30s in the space.

• Note that 10-Year swap spreads have traded through ’25 closing highs, with the Dec & Nov ’24 closing highs (-42.47bp & -41.95bp) providing the next levels of upside interest.
• Meanwhile, 30-Year swap spreads near their own ’25 closing top (-71.04bp). A break their would expose round number resistance -70bp.
• Several sell-side names hold medium-term long swap spread/ASW recommendations.

FX Exchange traded Option, covers the next 3rd Feb RBA meeting. Looking for further AUD Strength.

• AUDUSD (6th Feb) 68.5c, bought for 0.22 in 1k.

The underlying contract trades at 67.355, same as the spot.

• Noted on the Open that Data permitting, the AUDUSD chart looks interesting from here with the next immediate resistance in the Spot coming at 0.6799.
• A continuation through the latter would open to 0.6942 (2024 high and highest since Feb 2023).

After a brief pause post-ADP, Treasury futures continue to extend highs

• Currently, TYH6 trades 112-22 (+11.5)  session high - puts it back to best level since Dec 31
• Key short-term resistance is unchanged at 112-31, the Dec 18 high, where a break would undermine a bear theme and signal scope for a stronger recovery instead.
• Curves bull flattening: 2s10s -3.106 at 67.673, 5s30s -1.832 at 113.181.
• Bbg US$ index eases slightly: BBDXY at 1205.52 +.17.