OIL OPTIONS: Crude Calls Holding Premium Reflecting Upside Risk
The near-term crude call put option skews had shifted back toward the puts following an easing of Iranian supply risks last week although have edged slightly more bullish again since.
- The Brent second month call-put 25 delta spread is around +12.5% currently compared to a high of +16.9% on Jan. 14. The WTI second month skew is trading just below the highs from last week around +9.15%.
- The strength in call volatilities reflects ongoing geopolitical risks and recent Kazakhstan supply concern. IEA also today reduced its surplus outlook with an increased forecast for oil demand growth in 2026.
- The longer dated Dec26 call-put spreads have narrowed to resume the trend seen throughout the second half of 2025. The Brent spread is currently around -1.7% from -2.4% at the start of the year and WTI around -2.8% from -3.7%.
- Aggregate daily Brent option traded volume was 477k yesterday, of which 322k was calls.
- Brent MAR 26 up 0% at 64.95$/bbl
- WTI MAR 26 up 0.1% at 60.44$/bbl
Source: Bloomberg Finance L.P.
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US 10YR FUTURE TECHS: (H6) Trading Below Resistance
- RES 4: 113-22+ High Nov 25 and a key resistance
- RES 3: 113-09 76.4% retracement of the Nov 25 - Dec 10 bear leg
- RES 2: 113-07 High Dec 3
- RES 1: 112-31/113-00+ High Dec 18 / 61.8% of Nov 25 - Dec 10 leg
- PRICE: 112-12 @ 15:53 GMT Dec 22
- SUP 1: 112-06/111-29 Low Dec 16 / 10 and the bear trigger
- SUP 2: 111-19 1.236 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 3: 111-11 1.382 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 4: 111-00 Round number support
Treasuries have pulled back from their recent highs. A key short-term resistance has been defined at 112-31, the Dec 18 high. Clearance of this level would signal scope for a stronger corrective phase and open 113-00 initially, a Fibonacci retracement point. For bears, a continuation lower would refocus attention on 111-29, the Dec 10 low and a key short-term support. A breach of this support resumes the bear cycle that started Oct 17.
UK FISCAL: Treasury Confirms Spring Forecast On 3 March
In a statement, HM Treasury has confirmed that Chancellor of the Exchequer Rachel Reeves has asked the Office for Budget Responsibility to prepare an economic and fiscal forecast that she will deliver as the 'Spring Forecast' to the House of Commons on Tuesday, 3 March 2026.
- The statement says "the Spring forecast will not make an assessment of the government’s performance against the fiscal mandate and will instead provide an interim update on the economy and public finances. The government will respond to the March forecast through a statement to Parliament, in line with the government’s commitment to deliver one major fiscal event a year at the Budget."
- Despite the pledge of only one major fiscal event a year, Reeves was forced into policy announcements in the 2025 Spring Statement due to the UK's worsening fiscal landscape. A number of the spending cuts announced were reversed before implementation due to backbench Labour MP opposition, in turn pushing Reeves into significant tax increases in November's Budget statement.
EGB FUNDING UPDATE: Greece 2026 Funding Plan
- Financing needs for 2026 total E24.677bln (E8.871bln from MT/LT redemptions, E5.200bln interest on debt, E8.790bln of early repayments (including T-bill stock reduction), E6.739bln from other cash requirements (RRF loans, capital increases etc). This is partially offset by a projected primary surplus of E6.510bln.
- Financing sources:
- GGB issuance E8.000bln (E8.0bln 2025 plan, E6.2bln executed).
- Other financing sources (NGEU, EIB, CEB, etc.) E4.200bln
- Proceeds from equity and investment fund shares E618mln
- Decrease in cash reserves: E11.859bln
- Three GGB auctions planned for H1, on Feb 11, Apr 15 and Jun 17. All re-openings.
- T-bill gross target appears unconfirmed. 12 auctions planned for H1.
- The full plan can be found here (link)
