EURIBOR OPTIONS: Broken Put Mid-curve Condor

• Gold today broke to new all-time highs again Monday, with the bullish price action persisting even as equities post a solid recovery off Friday's lows. This continues to point to persistent resilience in gold demand, with the price extending gains since the beginning of September to near 20%.
• While algorithmic and discretionary macro positioning already has been in stretched long territory for a while according to TD Securities, (retail) ETF flows are seen as another recent driver behind bullish price action and would in theory have the potential to expand as the virtuous circle of strong price action is distributed further, reaching broader groups of investors. However, stretched long institutional positioning can add to gold's vulnerability to a potential correction.
• Société Générale today revised upwards their Q426 gold price forecast to $5000/oz from a previous $4,318/oz, seeing "ETF flows remaining strong [and] central bank buying expected to be resilient".
• From a technical perspective, the move higher maintains the price sequence of higher highs and higher lows. Sights are on  $4113.5, a Fibonacci projection point. Note that the trend is in overbought territory. A move down would be considered corrective and would allow the overbought set-up to unwind. Support to watch is $3836.5, 20-day EMA.
• The Gold-Silver Ratio meanwhile sits close to cycle lows Monday, pushing below the 80.0 handle for the first time since July 2024. Desks point towards speculative ETF demand underpinning recent gains in silver, which resulted in a move above a major resistance area around the $49.00-$50.00 region, strengthening a bull theme and paving the way for a climb towards $52.00 next. Support for silver to watch lies at $46.204, the 20-day EMA.

The German current account surplus was the second lowest since mid-2023 in August according to Bundesbank data released today, at E8.3bln, with the deterioration vs July's E15.6bln (revised from E14.8bln) driven primarily by a lower goods trade surplus.

• The current account surplus stood at 4.7% of GDP on a 12mth rolling basis, -0.2pps from July and -1.8pp from the Aug 2024 cycle high.
• The trend deterioration is driven by the trade balance, with the goods trade surplus falling to 4.3% in August as a 12m rolling sum of GDP, the lowest since August 2023 when the series was on an uptrend after its 2022 drop. For August in isolation, the German goods trade surplus stood at E8.3bln in nominal terms, the second lowest since May 2023, with recent drops over this summer underpinned specifically by lower exports to the US according to Destatis trade data.
• The German services trade deficit was roughly stable in recent months after deteriorating 2021 - 2024, standing at 1.7% of GDP throughout 2025 on a rolling 12-month basis.
• The primary income balance was a positive 3.6% of GDP in August on a 12-month rolling basis, around which level it continues to range since June 2024 (in between E150-160bln each month since then). This means that net income German residents earn from the rest of the world from labour and investments remained roughly stable in recent times.
• The secondary income balance, mainly consisting of net German government income from the rest of the world, has also seen little net movements in recent months, coming in at a negative 1.6% of GDP on a 12-month rolling basis in August.

• US Data/Speaker Calendar (prior, estimate)
• 10/14 0600 NFIB Small Business Optimism (100.8, 100.6)
• 10/14 0845 Fed VC Bowman moderated discussion ay IIF (no text)
• 10/14 1130 US Tsy $86B 13W & $77B 26W bill auctions
• 10/14 1220 Fed Chair Powell economic outlook MANE meeting (text, Q&A)
• 10/14 1300 US Tsy $95B 6W bill auction
• 10/14 1525 Fed Gov Waller, payments panel at IIF (no text, Q&A)
• 10/14 1530 Boston Fed Collins moderated discussion (text, Q&A)
• Source: Bloomberg Finance L.P. / MNI