BONDS: Bonds Weaker Through Early NY Trade As Energy Rallies

Wires report comments from a spox for the German gov't claiming that while Berlin is "open to discussing new partnership models between the EU and Canada", the term "associate member" needs to be "rethought". 

• During her annual State of the European Union address earlier today, European Commission President Ursula von der Leyen said that the Commission wants to "open the door for Canada to become the first associate member of the EU." However, some member states are reported to be cooler on the prospect than others (see EU: Commission Offers 'Associate Membership' To Canada, But Member States Wary).
• VdL's comments are reported to have caught national capitals off guard, with many in the position of attempting to balance what one diplomat quoted by Politico said were "only warm feelings for Ottawa", while protecting domestic industry and avoiding any blowback from the Trump administration in the US. 

SOFR & Treasury options trade outlined below: modest volumes in the lead-up to this afternoon's FOMC rate annc - some vol sales and put unwinds. Underlying futures firmer but still near midrange for the week, 10Y yield -.0328 at 4.9691% vs. 5.039% Tue high. Projected rate hike recede slightly vs. late Tuesday levels (*): Sep'26 at +23.1bp (+23.4bp), Oct'26 at +34.7bp (+35.3bp), Dec'26 51bp (+52.6bp), Jan'27 59bp (61.1bp).

• SOFR Options
  • Block, -4,250 SFRZ6 95.75/96.00/96.25 put flys, 6.0 ref 95.745
  • 1,500 SFRH7 95.50/95.75 put spds vs. 96.00/96.25 call spds ref 95.55
  • Block, 3,000 SFRZ7 98.50 calls, 2.5 vs. 94.455/0.20%
  • -2,500 0QZ6 94.75/95.25/95.75 put flys, 16.5 ref 95.39
  • 2,000 2QM7 95.50 straddles vs. 95.00 put, 49 net
  • 2,000 SFRV6 95.56/96.18 strangles, 2.5
  • +2,000 SFRZ6 95.56/95.75 put spds, 6.75
  • -7,500 SFRV6 95.56/96.25 strangles, 2.5-2.0
  • 3,000 SFRV6 95.62 puts vs. SFRZ6 95.50/95.56 put spds, cab net
  • 1,500 SFRV6 96.12/96.25/96.37 call trees, 0.5 ref 95.75
  • +2,000 0QX6 95.50/95.75 call spds, 8 ref 95.385
• Treasury Options:
  • 3,600 wk3 TY 107 calls, 2 ref 106-00 (exp 9/18)
  • appr 8,500 wk3 TY 106.5 calls vs. TYV6 106 calls, 19 net TYV over
  • over +5,600 FVV6 105.25 calls, 3.5 last ref 104-13.25
  • 1,800 TUV6 101.75 puts, 2.5 ref 102-02
  • +20,000 FVV6 104.75/105.75 1x2 call spds, 8
  • 4,500 FVV6 103.5/103.75/104 put flys, 1.5
  • 5,000 FVV6 106.25 calls, .5 ref 104-12.5
  • +2,000 TYZ6 106 calls, 62
  • +2,000 TYV6 106.5/107/107.5 call flys, 4
  • +2,000 TYV6 104.25/104.75 put spds 3 vs. 105-28.5/0.10%

• MNI: US 15 SEP SECURED OVERNIGHT FINANCING RATE 3.64% (+2BP VS PRIOR)
• SOFR PERCENTILES: 25TH 3.62% (+2BP); 1ST 3.57% (UNCH)
• SOFR PERCENTILES: 75TH 3.69% (+2BP); 99TH 3.72% (+2BP)
• US 15 SEP SOFR VOLUME USD 2.952 TLN (2.861 TLN PRIOR)