EM LATAM CREDIT: El Salvador Fiscal Sustainability Law Passes - Positive

Compared with the 29-page initial draft Ways and Means framework released last week, the near-400 page House Ways and Means Committee tax bill released today (link via Punchbowl News is here) has a few areas that will continue to be contentious in the days to come:

• Includes a State and Local Tax (SALT) deduction cap increase (to $30k), a major political issue for blue state Republicans (and it's unclear whether this deduction will be large enough for some of them who eyed a figure above $100k, therefore putting this bill in jeopardy of not passing in the House in its current form).
• Includes - per some of Pres Trump's key campaign pledges - a tax break on tips, as well as on car loans, and provides a higher standard deduction for seniors (a way of giving Social Security recipients a tax cut, but falling short of Trump's promise of eliminating taxes on Social Security). But as with the draft release, the text still doesn't include language on a "Millionaire" tax bracket (keeping the top marginal bracket at 37%).
• The bill raises the debt limit by $4T as expected, but that's smaller than the $5T eyed by Senate Republicans.
• Markup of the bill is scheduled to start Tuesday at 2:30pm ET - House Speaker Johnson has aimed to get the chamber to pass the bill by Memorial Day weekend later this month.

• One offsetting factor that is worth watching is the extent of any further weakness in travel-related prices after the surprisingly sharp weakness in March touched on above. US trade policy and broader actions have seen travel to the US continue to slow, and in some cases particularly sharply.
• Canada is a clear example, with Statistics Canada noting today that the number of Canadian-resident return trips to the US by air were down -20% Y/Y in April whilst return trips by automobile were down -35% Y/Y.
• The US side of the ledger isn’t as extreme, with overall foreign-originating flights at 3% Y/Y as they corrected after a weak -10% Y/Y in March although with the two readings likely biased by this year’s later timing of Easter.
• Another caveat to tourism weakness here is that domestic flights account for circa six times as many passengers as international flights.
• Total TSA checkpoint numbers have been broadly mimicking last year’s seasonal pattern, i.e. a flattening after solid growth last year but not yet pointing to a more pronounced moderation. 

Option desks reported heavy option volumes on mixed trade Monday as markets adjust to US/China 90 day tariff reduction headlines (kicked off around 0300ET). Curves bear flattening while projected rate cut pricing retreats from this morning levels (*) as follows: Jun'25 at -2.0bp (-2.8bp), Jul'25 at -10.8bp vs. (-13.1bp), Sep'25 -27.0bp (-29.3bp), Oct'25 -40.3bp (-42.6bp).

• SOFR Options:
  • -20,000 SFRZ5 96.75/97.25 call spds
  • +15,000 0QK5 96.25 puts, 0.5 ref 96.55
  • +6,000 0QK5 96.81/96.87/96.93/97.00 call condors, 0.25 ref 96.53
  • 5,000 SFRU5 95.68/95.81/96.00 2x3x1 put flys, 0.25 ref 95.97
  • +5,000 SFRU5 95.68/95.75 put spds, 8.75 ref 95.97
  • 2,500 SFRV5 96.25/96.50/96.75/97.00 call condors ref 96.235
  • Block, 4,000 SFRK5 95.75/95.81 call spds, 0.50 ref  95.715
  • Block, 3,000 0QM5 97.00/97.37 call spds, 2.0 ref 96.53
  • 2,500 SFRZ5 95.75/95.87 put spds vs. 96.37/96.50 call spds ref 96.22
  • 20,000 0QU5 97.25/97.75 call spds ref 96.555
  • 4,000 SFRM5 95.62/95.68 put spds ref 95.71 
  • 2,500 0QM5 96.56/97.06/97.56 call flys ref 96.495
  • 4,000 SFRZ5 96.75/97.00/97.50/97.75 call condors ref 96.21 to -.205
  • 2,500 0QU5 95.50/95.75/96.00/96.12 broken put condors ref 95.57
  • Block, 3,000 0QM5 96.25 puts, 4.5 ref 96.51
  • over 14,000 SFRU5 96.25/96.75 call spds ref 95.975
  • 4,000 SFRZ5 95.68/95.81 put spds ref 96.215
  • Block 3,000 SFRM5 95.75/95.87 2x1 put spds ref 95.715
  • Over 18,750 SFRK5 95.75 puts, 4.0 last ref 95.71
  • 3,000 0QN5 97.12/97.37 call spds ref 96.595
  • 13,000 SFRZ5 97.00/98.00 call spds, 8.0 ref 96.22
  • Block/screen, 11,000 SFRQ5 95.75/95.81/95.87/95.93 put condors, 1.25 ref 95.985 to -.98
  • 2,000 SFRQ5 96.50/96.75 vs. SFRZ5 97.00/97.50 call spd spd
  • 3,000 SFRM5 95.68/95.81 put spds ref 95.71
  • 2,000 SFRK5 95.75/95.87 2x1 put spds ref 95.71
  • 1,500 SFRU5 96.00/96.12/96.25/96.37 call condors, ref 95.98
  • 1,500 SFRH6 97.50/97.75/98.00/98.25 call condors ref 96.425
  • 1,500 SFRK5 95.50/95.62/95.75 put flys ref 95.715
  • 2,000 SFRM5 95.68/95.75 put spds ref 95.715
• Treasury Options:
  • 4,700 USN5 109/112 put spds, 44 ref 113-13
  • 2,500 FVM5 107/107.75 put spds, 19ref 107-21.5
  • 3,500 TYM5 110.5 puts, 47 
  • over 5,000 FVM5 107.25 puts, 14 last
  • over 3,500 FVM5 107.5/109 strangles, 25 ref 
  • 5,600 TYM5 110.75/112 call spds ref 110-03.5
  • over 8,500 wk5 FV 109/110 call spds ref 107-21 to -20.5
  • over 13,000 Wed wkly TY 109.5/109.75 put spds ref 110-08.5 to -06.5
  • 3,000 Wed wkly TY 110.75 puts, 26 ref 110-09
  • 4,100 FVM5 107.5/109 strangles ref 107-20.5
  • over 12,200 TYN5 109 puts, 24-27 ref 110-13