PIPELINE: Corporate Bond Update: $2.75B Michaels 2Pt Launched

SOFR & Treasury call option volume surged Tuesday, fading the continued decline in underlying futures to lowest level since mid-August (TYH6). Projected rate cut pricing vs. morning levels (*): Jan'26 steady at -1.2bp, Mar'26 at -6.1bp (-5.2bp), Apr'26 at -10.7bp (-10.2bp), Jun'26 at -21.2bp (-20.7bp). 

• SOFR Options:
  • 19,500 SFRM6 96.18 puts, 0.5 ref 96.545
  • Block/screen, over 100,000 SFRH6 96.43/96.56 call spds, 2.0 ref 96.38
  • +35,000 (pit/screen) SFRM6 96.50/96.56/96.68/96.75 call condors, 1.75 ref 96.53
  • +16,000 0QU6 97.50* calls vs. -24,000 0QZ6 96.87/97.00 call spds, 0.0 net package (*On Jan 8, paper +125,000 QU6 97.50 calls, 7.5 vs. 96.80/0.17%)
  • Block, 4,000 SFRM6 96.31/93.43 put spds vs. SFRM6 96.56/96.68 call spds 
  • +5,000 2QG6 96.62 calls, 6 vs. 96.585/0.40%
  • -2,000 SFRZ6 96.75/97.00/97.25 call fly, 3.25
  • -1,500 SFRH6 96.43/96.50/96.56 call tree, 0.5
  • 7,000 SFRZ6 96.25/96.43 2x1 put spd, cab
  • 7,500 SFRZ6 96.37 puts 5.25
  • +1,500 3QM6 96.125 puts, 12.5
  • +2,500 0QM6 96.87/97.12 call spds vs 96.825/0.05%
• Treasury Options:
  • 15,000 TYH6 109.5/110.5/111/111.5 broken put condor, 2 ref 111-15
  • 32,500 TYH6 112.5 calls, 16 ref 111-15, adds to earlier print for total volume over 64.8k, total open interest 95,026 coming into the session.
  • -5,000 TYG6 111.75 puts, 22
  • -3,500 TYG6 111.5 puts, 14
  • 4,000 TYG6/TYH6 111 put spds, 22
  • +4,500 TYG6 111.25/111.75 put spds, 15-16
  • +4,000 TYJ6 112 straddles, 152-155 vs. 111-15.5/0.22%
  • +4,000 TYH6 111 puts, 24
  • +3,500 TYH6 110.5 puts, 15
  • +5,000 USH6 112 puts, 28
  • Blocks, +10,000 USH6 114 straddles, 225-232
  • 5,500 USH6 115 calls, 117, total volume over 13k
  • -2,000 TYH6 112/113.5 call spds, 17 vs. 111-18/0.27%
  • +5,000 TYG6 111.25 puts, 4 ref 111-21.5/0.20%
  • -4,000 TYG6 111.25/111.75 2x1 put spds, 9
  • -20,000 TYH6 110.5/111.5/112 broken put fly, 3

• Major US equity indexes continued to extend sharp losses Tuesday, SPX eminis and Nasdaq down 2% in late trade as Information Technology, Consumer Discretionary and Financial sector shares underperformed.
• Indexes gapped lower this morning as trade tensions reignite after Trump’s threat to impose tariffs on countries opposing his plan to control Greenland: 10% tariffs on Denmark, Norway, Germany, the UK, France, the Netherlands, Sweden, and Finland by February should they continue to oppose the sale of Greenland to the US, which would increase to 25% by June.
• Currently, the DJIA trades down 857.81 points (-1.74%) at 48499.93, S&P E-Mini Futures down 138.75 points (-1.99%) at 6837.25, Nasdaq down 527.7 points (-2.2%) at 22986.89.
• Semiconductor makers continued to weigh on the tech sector in the second half: Broadcom -4.83%, KLA Corp -4.30%, NVIDIA -3.65%, QUALCOMM -3.04%, Applied Materials -3.02% and Microchip Technology -2.90%. Bucking the broader chip maker decline, Sandisk Corp gained +7.93% while Intel Corp gained +2.36% (well off early highs).
• Travel and auto related shares weighed on the Discretionary sector: Norwegian Cruise Line -6.27%, Garmin -5.10%, MGM Resorts International -4.52%, Expedia Group -4.11%, General Motors -3.96%, Hilton Worldwide -3.90%, Genuine Parts -3.53% and Tesla -3.33%.
• Meanwhile, servicer stocks weighed on the Financial Services sector: KKR & Co -5.76%, Coinbase Global -5.61%, Synchrony Financial -5.27%, Blackstone -5.11% and Invesco -4.79%.
• On the positive side, a mix of Materials, Energy and Health Care sector shares led advances in the second half: Albemarle +4.38%, Constellation Brands +4.23%, Expand Energy +4.13%, Newmont +3.60%, Boston Scientific +3.49% and Monster Beverage +3.31%.

• Crude prices have risen on Tuesday with support from disruption to Tengiz output alongside a weaker dollar, while the market continues to monitor geopolitical developments.
• WTI Feb 26 is up by 1.6% at $60.4/bbl.
• Reuters reports that Kazakhstan’s Tengiz oil field could be halted for another 7-10 days after shutting down on Sunday, citing three sources.
• A bull cycle in WTI futures remains intact for now and a short-term cycle high last week reinforces a bull theme.
• Price has recently traded through a key short-term resistance at $61.25, the Oct 25 high, highlighting a stronger reversal of the recent downtrend.
• Sights are on $62.59 next, a Fibonacci retracement. Initial firm support lies at $58.83, the 50-day EMA.
• Elsewhere, Henry Hub front month is extending gains today after jumping yesterday on the back of cold weather risks from the coming weekend.
• US Natgas Feb 26 is up by 26.0% at $3.92/mmbtu.
• Meanwhile, spot gold has risen to another record high, buoyed by the sharp move lower in the USD index amid the latest US tariff threats.
• Spot gold is currently up by 1.9% at $4,761/oz.
• All focus now is on potential comments from President Trump, who is en route to Davos.
• The trend structure in gold remains bullish and the latest fresh cycle high reinforces current conditions. Sights are on $4,799.9 next, a Fibonacci projection.