US TSY FUTURES: BLOCK: Jun'26 10Y Ultra-Bond Buy

Monday's Europe rates/bond options flow included:

• DUJ6 106.90/106.80/106.70/106.50p condor, bought for 2.25 in 10k total now
• ERZ6 98.125/98.3125/98.4375/98.625 call condor paper paid 2.75 on 3K
• SFIH6 96.50^, bought for 5.75 in 4k
• SFIH6 96.45/96.55/96.60/96.75 call condor, paper sells for 2.75 in 12k
• SFIN6 96.60/96.80cs 1x2, bought for 5.5 in 8k
• SFIU6 96.65^, trades for 22.25 in 12k, this was done Paper to Paper, some suggest bought
• SFIU6 96.75^, bought for 20.5 in 5k

The NFIB's January Jobs Report showed slight a pullback in labor market conditions for small businesses vs December. This report continues to send mixed signals about current labor market conditions but overall is suggestive of a stabilization following a multi-year pullback. (Report PDF link here).

• The latest release introduces what looks to be a useful development in the form of a new Small Business Employment Index, "which measures the current state of the small business labor market. The new index integrates actual and planned changes in employment and employee compensation into a singular data point. A higher Index reflects an overall tighter labor market; a lower Index reflects an overall weaker labor market."'
• According to the NFIB, the new index "fell nearly 1 point in January to 101.6, erasing about half of the large gain in December, which reached the highest level since March 2025. The Index remains above the historical average of 100, and just slightly above the 2025 average of 101.2."
• The NFIB's chart is below; we await the availability of the underlying data to see how well it correlates with macro labor market variables (the NFIB's full small business report is out Tuesday morning).
• In the meantime we can see a pullback in some key categories: net hiring plans to 16% from 17% (3-month low), "positions not able to fill" 31% from 33% (lowest since 2017), net compensation plans 22% from 24% (3-month low); current net compensation ticked up to 32% from 31% prior however (7-month high). We took note that "50% of owners reported hiring or trying to hire in January, down 3 points from December and the lowest reading since May 2020."
• Most of the major series remain in a relative downtrend, with declining job openings / hiring difficulty chiming with other data series.  
• The recent stabilization in NFIB compensation series suggests that the pullback in wage growth may be stalling, though. And the headline Employment Index appears to be settling in at historically normal levels consistent with solid economic expansion.
• Historically NFIB hiring plans have been correlated with private payrolls growth trends but lately small business' solid outlooks have diverged with the "hard" payrolls data which have deteriorated in recent months.

A Democratic overperformance in Louisiana on Saturday - and a string of recent special election victories across a broad cross-section of constituencies - suggests that the political environment is tilting towards Democrats ahead of November's midterm elections.

• VoteHub notes that Democratic candidate Chasity Verret Martinez's 62% of the vote share in Louisiana's 60th represents a "37 point shift left," as President Donald Trump carried the district by 13 points in 2024.
• While the usual caveats apply in low-turnout special elections, the Louisiana election follows strong victories for Democrats in state house elections in Minnesota and Texas in 2026.
• MS Now notes, "Republicans invested a considerable amount of resources to keep a state Senate seat in the suburbs of Fort Worth. They failed: Democrat Taylor Rehmet... won a double-digit victory in a district Donald Trump won by 17 points in 2024."
• The Downballot reports, “Since Trump returned to the White House, Democrats have picked up eight Republican-controlled districts through special elections, as well as 18 seats in New Jersey and Virginia during those states’ regularly scheduled contests last November. Republicans have flipped none.”
• The Washington Post notes that Democrats have also flipped seats in states Trump won, including Iowa, Pennsylvania and Mississippi.
• Polymarket notes that Democrats are strongly favoured to flip control of the House (85% implied probability). The probability of Democrats winning both the House and Senate has also ticked up slightly since November's off-year elections to 37%.