BRAZIL: BRL Buoyed By Hawkish Copom, As Near-Term Rate Cut Prospects Fade

Retail sales rose 5.9% Y/Y in the first week of November (to Nov 8), per the latest Johnson Redbook Retail Sales Index release. It's still early in the month but that's a slight uptick from 5.4% in October.

• We almost certainly won't be getting October retail sales data out as scheduled Friday (we still await the September report which was postponed due to the government shutdown). Between Chicago Fed CARTS (final est for Oct due out Thursday) and Redbook, though, it appears as though retail sales were broadly solid in October at least in nominal terms.
• That said, between politics and persistent inflation, consumer sentiment was subdued in the latest week, per the report: "Business was slow as people focused on the election, which is a common trend. Additionally, the federal government shutdown is creating challenges for some families. Persistent inflation and tariffs are also having a negative impact on the economy. November marks the official start of the holiday season, which begins in the last week of the month. This period serves as a transition for retailers, who take the opportunity to clear unsold merchandise and prepare for the holiday rush. While some stores are starting to promote holiday items earlier than usual, others may not be fully stocked until the day after Thanksgiving."

• MNI: US REDBOOK: NOV STORE SALES +5.9% V YR AGO MO
• US REDBOOK: STORE SALES +5.9% WK ENDED NOV 08 V YR AGO WK

SOFR options saw better downside put trade prior to the release of weekly ADP employ data - turning to upside calls (Treasury option volumes rather modest so far). Underlying futures extended highs after the ADP showed a decline in jobs (TYZ5 +9 at 112-31), while projected rate cut gains vs late Monday levels (*): Dec'25 at -17.1bp (-15.5bp), Jan'26 at -27.9bp (-25.1bp), Mar'26 at -38.1bp (-35.2bp), Apr'26 at -44.9bp (-41.3bp).

• SOFR Options: (Note Nov options expire Friday)
  • +20,000 SFRF6 96.62/96.75/97.00 2x3x1 call flys, 2.25-2.5 vs. 96.435/0.09%
  • -3,000 SFRX5 96.50 calls, 1.5 ref 96.25
  • +4,000 SFRZ5 96.43/96.50, 0.5 vs. 96.28/0.05%
  • Block, +5,000 0QH6 96.25/96.50 put spds, 3.5 ref 96.895
  • 1,300 SFRX5 96.18/96.25 box
  • Block, -10,000 SFRZ5 96.50/96.62 call spds, 0.25
  • Block/screen, 4,000 SFRG6 96.68/96.81/96.87/97.00 call condors, 0.75
  • 4,000 SFRZ5 96.37/96.56 call spds vs. SFRF6 96.56/96.75 call spds, 2.5 net/Jan bought over
  • +4,000 SFRZ6 96.12/96.50/96.75 broken put flys, 2.5
  • -2,000 SFRX5 96.18/96.31 strangles, 0.5
  • 9,350 SFRX 96.18 puts, .25-0.50 total volume over 17,500
  • over 8,300 SFRX5 96.25 puts
  • -6,500 SFRZ5 96.43/96.68 call spds, 0.25-0.50
• Treasury Options:
  • 2,000 TYZ5 111.5/112 put spds, 1
  • -3,500 TYZ5 112.75 calls, 24 vs. 112-23.5/0.47%
  • +2,500 Wednesday weekly TY 112.5 puts, 1 vs. 112-26/0.28%
  • +2,500 Wednesday weekly TY 112.75 calls, 21 vs. 112-24/0.45%