UK: Chancellor Survives Letting Revelations, Keeping Budget On Track
Chancellor of the Exchequer Rachel Reeves will remain in place after a chaotic day on 30 Oct, during which revelations surrounding the letting of her house in south London briefly threatened to force her from office just weeks ahead of a critical Budget statement on 26 Nov. On 29 Oct, the Daily Mail reported that Reeves had not obtained the correct licence to let her family home after she moved to the Chancellor's residence at 11 Downing St. following the 2024 general election.
- In an initial exchange of letters with PM Sir Keir Starmer, Reeves acknowledged her error, while Starmer said he accepted her version of events and that the independent Advisor on Ministerial Standards, Sir Laurie Magnus, had decided not to investigate further. Amid mounting political pressure during the day, emails came to light seemingly putting the blame on the letting agency, rather than Reeves or her husband.
- In a late-night exchange of letters, Reeves apologised for an "inadvertent mistake", while Starmer said it was "regrettable" that Reeves did not release the emails initially, but that he saw "no need for any further action".
- A greater challenge to Reeves' position may come post-budget, with growing expectations that Labour's manifesto promises on income tax/VAT/national insurance will be broken. This risks a major public backlash, and Reeves may end up as the senior minister forced out if pressure from the public or Labour backbenches becomes too much for Starmer.
- Polling of grassroots Labour members shows Reeves as one of the least popular Cabinet ministers, alongside the PM himself (see chart below).
Chart 1. Net Approval Ratings for Senior Cabinet Ministers, %
Source: Survation, LabourList. Base: All respondents. Unweighted total: 1,254 Full question: Do you have a favourable or unfavourable opinion of the following?
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EQUITY OPTIONS: Ratio Call Spread
SX5E (19th June) 6000/6500cs 1x4, bought for 17.10 and 17.50 in 5k (5kx20k).
OUTLOOK: EUROSTOXX50 Futures Head North
- In the equity space, a bull cycle in S&P E-Minis remains intact. Key short-term resistance has been defined at 6756.75, the Sep 22 high where a break would resume the primary uptrend. This would open 6787.63, the 1.382 projection of the Aug 1 - 15 - 20 price swing. On the downside, initial support to watch lies at the 20-day EMA, at 6656.22. It has been pierced, a clear break of it would signal scope for a deeper retracement, potentially towards the 50-day EMA, at 6541.51.
- EUROSTOXX 50 futures maintain a bullish theme. This week’s gains have resulted in a breach of key resistance and the bull trigger at 5525.00, the Aug 22 high. The break confirms a resumption of the uptrend and paves the way for a climb towards 5564.82, a 0.764 projection of the Aug 1 - 22 - Sep 2 price swing, and 5575.00, the Mar 3 high (cont.) and a key resistance. Initial firm support lies at 5452.19, the 20-day EMA.
US TSY FUTURES: Short Setting Further Out The Curve Dominated On Tuesday
OI data points to a mix of long setting (TU), short cover (FV) & short setting (TY through WN) as the Tsy curve twist steepened on Tuesday, with the latter dominating, accounting for an $11.3mln DV01 equivalent shift in net positioning.
| 30-Sep-25 | 29-Sep-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,568,610 | 4,545,811 | +22,799 | +772,151 |
FV | 6,641,928 | 6,683,876 | -41,948 | -1,839,602 |
TY | 5,458,585 | 5,436,020 | +22,565 | +1,469,908 |
UXY | 2,450,087 | 2,429,244 | +20,843 | +1,821,149 |
US | 1,837,844 | 1,818,108 | +19,736 | +2,788,969 |
WN | 2,054,194 | 2,026,201 | +27,993 | +5,194,247 |
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| Total | +71,988 | +10,206,822 |
