TURKEY: Court Lifts Block On Pro-Kurdish HDP Funding In Boost For Opposition
The Turkish Constitutional Court has lifted a block on the state funding of the pro-Kurdish People's Democratic Party (HDP) in a notable boost for the opposition ahead of the general election, expected on 14 May. The HDP is scheduled to receive TRY539mn (USD29mn) in state funding this year, but the gov't blocked this over allegations that the party is the political wing of the Kurdistan Workers' Party (PKK) terrorist group. Without this funding the HDP would have found it very difficult to get its (anti-Erdogan) message out effectively.
- It remains to be seen whether the HDP will link up with the opposition Nation Alliance that is seeking to oust President Recep Tayyip Erdogan in the election. If a sizeable portion of the HDP's Kurdish electorate votes for Nation Alliance candidate Kemal Kilicdaroglu it could put him over the top in terms of vote share.
- However, given the nationalist elements within the Nation Alliance (Meral Aksener's Good Party), the HDP's presence could result in rancour and major disagreement before the election takes place.
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US TSYS: Early SOFR/Treasury Option Roundup
Option volumes well off Monday's pace, better put trade on net:
- SOFR Options:
- Block, 3,000 SFRM3 94.62/94.75 put spds, 3.25 ref 94.875
- Block, 4,000 SFRN3 94.87/95.00 put spds, 6.0 vs. 94.945/0.10%
- 3,600 SFRH3 95.00/95.06/95.18/95.25 put condors ref 95.09
- Block, 4,000 SFRG3 95.12/95.18/95.25 put trees, 3.0 vs. 95.105/0.70%
- Block, 3,000 OQH3 95.87/96.00 put spds, 8.0 ref 95.78
- 2,000 SFRU3 95.06/95.12/95.18/95.25 call condors ref 94.985
- Treasury Options:
- 3,000 TYH3 114.25 calls, 27 ref 113-18
- 2,600 wk2 TY 112.25/112.5/112.75/113 put condors ref 113-14.5
- 2,400 FVJ3 108.25/109.75 put spds ref 108-31.75
- 1,500 FVH3 106.5/107/108 broken put flys ref 108-15.25
US EURODLR FUTURES: Post-LIBOR Settle Update: 3M New High, Spds Pare Inversion
Lead quarterly Mar'23 (EDH3) -0.010 to 94.94 after 3M LIBOR set' inches +0.00186 to new 14-year high of 4.84500% (+0.01086/wk).
- Fed funds implied hike for Mar'23 at 25.4bp, May'23 cumulative 44.2bp to 5.026%, Jun'23 53.6bp to 5.120%, terminal at 5.120% in Jul'23/Aug'23.
- Balance of Eurodollar Whites (EDM3-EDZ3) steady to +/-0.005, Reds (EDH4-EDZ4) +0.005-0.030, Greens through Blues (EDH5-EDZ6) +0.035-0.015, Golds (EDH7-EDZ7) steady to -0.005.
- Current deferred spds vs. prior settles:
- Jun'23/Sep'23: +0.000 vs. +0.005
- Mar'23/Red Mar'24: -0.555 vs. -0.550
- Jun'23/Red Jun'24: -1.280 vs. -1.260
- Option recap: Surge in SOFR option volume Monday, two-way in wings as underlying continued to sell-off/price in higher for longer rate hike expectations following last Fri's NFP jobs surge.
US 10YR FUTURE TECHS: (H3) Bear Cycle Extends
- RES 4: 116-00 High Feb 2
- RES 3: 115-22+ High Feb 3
- RES 2: 114-18 20-day EMA
- RES 1: 114-11+ High Feb 6
- PRICE: 113-15+ @ 11:46 GMT Feb 7
- SUP 1: 113-10+ Feb 6 Low
- SUP 2: 112-29 76.4% retracement of the Dec 30 - Jan 19 bull run
- SUP 3: 112-18+ Low Jan 5
- SUP 4: 112-10+ Trendline support drawn from the Oct 21 low
A sharp pullback in Treasury futures Friday and a continuation lower Monday, highlights a bearish cycle and signals scope for an extension of the current bear cycle. The contract has breached 114-05+, the Jan 30 low and a short-term bear trigger. Note that price has also breached the 50-day EMA. This opens 112-29 next - a Fibonacci retracement. Initial firm resistance is seen at 114-18, the 20-day EMA.
