OPTIONS: Busier Session To End The Week Sees Downside Lean In Euro Rates

Wednesday's Europe rates/bond options flow included:

• OEU5 117.25/116.75/116.50 broken put fly, bought for 10.5 in 2k
• ERU5 98.87c bought for 0.25 in 4k Today, this has been bought in 20k Total since Yesterday.
• ERH6 98.50/98.25/97.75p fly bought for 2.75 in 3k.
• ERH6/0RH6 98.375/98.625cs spread, bought the front for half in 20k
• ERH6 98.0625/98.00/97.9375/97.875p condor, bought for 1.5 in 8k
• ERM6 98.37/98.25/97.93 broken p ladder, bought for flat in 15.5k total

• Looking across a detailed selection of CPI core goods items, we estimate a median increase of 0.29% M/M in May after -0.01% M/M in April.
• It points to growing impact from tariffs, even if weakness in larger categories such as new & used vehicles and apparel weighed on overall core goods inflation as noted earlier (-0.04% M/M vs median analyst estimates of 0.20% after 0.06% M/M in April), or core goods ex used vehicles at 0.03% M/M after 0.15%.
• You can see from the charts below just how many of these series aren’t seasonally adjusted (per today’s BLS release pdf). Whilst that suggests some caution is needed, we note that more broadly, core CPI ex used vehicles saw a non-seasonally adjusted -0.03% M/M after 0.07%, with a May decline the norm in pre-pandemic years. 

• US TSY 9Y-11M AUCTION: NON-COMP BIDS $125 MLN FROM $39.000 BLN TOTAL