US: Daily Brief 10-Dec-25: Trump Pushback On 'Affordability' Campaign

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• At 11:00 ET 16:00 GMT, President Donald Trump will meet bilaterally with Syrian President Ahmed al-Sharaa. At 15:30 ET 20:30 GMT, Trump will hold a swearing-in ceremony for the US ambassador to India.
• The Trump administration announced pardons for allies accused of aiding efforts to overturn the 2020 presidential election. Trump said no administration officials will attend this month’s G20 summit in South Africa.
• Eight centrist Democrats voted with Republicans on a Continuing Resolution and three-bill appropriations package to fund the US government through January 30.
• The shutdown deal fails to achieve Democrats’ core demand of an extension to Affordable Care Act subsidies, but does secure a promise to backpay federal workers and a provision to reverse layoffs of federal workers made during the shutdown. Perhaps most importantly for Democrats, the shutdown has reframed the 2026 midterms around healthcare, successfully wrestling control of the media discourse for the first time since Trump returned to office.
• The US and China have suspended reciprocal port fees, signalling that the trade truce is holding.
• Trump suggested tapping tariff revenue to fund direct payments to Americans as the Supreme Court weighs the constitutionality of his tariffs.
• Hungarian Prime Minister Viktor Orbán scored a one-year exemption from US sanctions on buying Russian oil, a sign of Trump's ambivalent approach to sanction enforcement.
• Chart of the Day: Positive US consumer sentiment is being driven by a stock market ‘wealth effect’.

Full Article: US DAILY BRIEF

Treasury options leaning toward low delta calls overnight (large Jan'26 buyer returns), SOFR option volume light at the moment. Underlying futures weaker, near middle overnight range - bit of risk as hopes of ending US Gov shutdown rise after eight Democrats voted with Rep's on CR to fund gov through end of January. Projected rate cut pricing retreats in turn vs late Friday levels (*): Dec'25 at -16.3bp (-16.5bp), Jan'26 at -26.1bp (-27.1bp), Mar'26 at -35.8bp (-37.6bp), Apr'26 at -41.6bp (-43.6bp).

• Treasury Options:
  • +50,000 TYF6 113.5 calls, 27 (last Thursday: +100,000 TYF6 113.5 calls, 30-32 vs. 112-18/0.32%)
  • over +/-15,400 TYZ5 113 calls, 16-17 ref 112-19
  • over 10,400 TYZ5 112.25 puts
  • 3,000 TYZ5 113.5/114 call spds ref 112-19 to -18
  • 1,200 TYZ5 110.75/111.75 put spds ref 112-18.5
  • 2,300 TYF6 111/112 put spds ref 112-15.5
  • -1,500 TYG6 113.5 calls, 39 vs. 112-15/0.35%
  • +3,000 wk4 TY 113.5 calls, 11
  • +1,000 TYH6 112.5 straddles, 226
  • -4,000 wk2 TY 113.25 calls, 3
  • +2,000 USF6 130 calls, 1
  • 1,000 FVZ5 108.25/108.5/108.75 put flys ref 109-07
  • +1,000 FVZ5 109.25 straddles, 34.5
  • +3,000 Thu wkly FV 109 puts, 1.5
  • 3,400 TYZ5 114.5 calls, 3 ref 112-19.5
• SOFR Options:
  • 3,000 0QX5 96.87 puts, 4.5 vs. 96.87/0.52%
  • 4,000 SFRZ5 96.37 calls, cab
  • over 4,000 SFRZ5 96.18 puts, 0.5 last
  • 1,000 SFRZ5 96.06/96.12/96.18 put flys ref 96.24

The recovery rally in Bund & gilt futures has stalled after the opening gaps lower were filled and crude oil futures based following a move away from session highs.

• Tsys still the underperformer amongst core global FI markets given optimism surrounding the potential end of the U.S. government shutdown. Tsy spreads vs. Bunds 2.5-3.0bp wider across the curve.
• Peripherals and semi-core EGBs remain tighter vs. Bunds given the more constructive risk backdrop.