EMISSIONS: EUA Auction Calendar Week Ahead (Calendar Week 42)

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• At 10:10 ET 15:10 BST, President Donald Trump will deliver remarks to the White House Religious Liberty Commission.
• Treasury Secretary Scott Bessent said Trump's economic policies need more time, following Friday's soft jobs report. Bessent downplayed the impact of Trump’s tariff agenda on US manufacturing jobs.
• Bessent warned that the US would have to refund half of the tariffs it has collected if it loses a case challenging Trump’s emergency declaration at the Supreme Court.
• BRICS countries will meet virtually today to dicuss the impact of Trump's tariffs.
• The already-strained relationship between Washington and Seoul took another hit after hundreds of South Korean workers were swept up in an immigration raid in Georgia.
• A new Pentagon strategy report is expected to put domestic considerations above countering adversaries.
• The implied probability of a government shutdown on October 1 ticked up to roughly 50%.
• Senate Majority Leader John Thune (R-SD) will today take the first step of a 'nuclear option' to advance executive branch nominees.  
• The US and EU appear closer to coordinating new sanctions on Russia, but political obstacles may undermine the process.
• Trump issued a ‘last warning’ to Hamas as Israel initiates a new military phase in Gaza City.
• IAEA Director Rafael Grossi said there is "still time" for a nuclear deal with Iran.
• Poll of the Day: The Trump Administration has declared more emergencies than any of its predecessors.

Full Article: US DAILY BRIEF

Option desks report decent SOFR & Treasury options trade overnight, some chunky SOFR call sales/unwinds and vol structure selling in Treasury options. Underlying futures firmer - upper half of relatively narrow overnight range - but still off last Friday's post-employment data highs. Projected rate cuts adding to late Friday (*) levels: Sep'25 at -28.4bp (-28bp), Oct'25 at -48.2bp (-47.3bp), Dec'25 at -70.6bp (-69.7bp), Jan'26 at -84.7bp (-83.5bp).

• SOFR Options
  • 10,000 SFRV5/SFRZ5 96.50/96.62
  • -8,000 SFRZ5 96.18/96.73 1x2 call spds 3.75
  • Block, 5,000 SFRU5 96.00/96.12 call spds 1.25 over 95.93 puts
  • +4,000 SFRX5 96.37/96.50/96.62 call flys, 2.25
  • +2,000 SFRX5 96.25/96.37/96.62 broken call flys, 0.25
  • +2,000 SFRZ5 96.56/96.68 call spds, 2.0
  • -2,500 SFRH6 96.50/97.00 call spds vs. 96.62/0.25%
  • 4,000 SFRU5 95.75/95.87/96.00 put flys, 2.5 ref 95.99
  • Block, +5,000 SFRZ5 95.87 puts, 0.5
  • 4,100 0QU5/2QU5 97.00 call spds, 1.5 net
  • 2,000 SFRZ5 96.00/96.06/96.25/96.31 call condors, 2.0
  • 2,000 SFRU5 96.00/96.12 call spds vs. 95.93 put, 1.0 net ref 95.99
  • 1,000 SFRV5 96.43/96.68 call spds vs. 0QV5 97.25/97.50 call spd spd
  • over -34,700 (pieces) SFRU5 95.87 calls, 11
  • 2,000 0QZ5 97.25/97.37 call spds, 3.5 vs 97.075/0.10%
• Treasury Options:
  • -10,000 TYV5 112.75/113.25/113.5/114 iron condors (wings x2), 13 net cr
  • 2,500 TYV5 111.5 puts vs. 115.25/115.75 call spds ref 113-12.5
  • -1,250 TYV5 113/114 1x2 call spds, 7
  • -3,000 FVX5 108.75 puts, 8.5
  • 2,300 FVX 109.75 straddles, 107-107.5
  • +1,500 TYX5 113 straddles 148 ref 113-13.5
  • -1,600 TYV5 112/114.75 strangles, 16 ref 113-11.5
  • 1,500 USV5 115/116.5 put spds ref 116-13
  • -1,250 TYV5 112/115 strangles, 16 ref 113-11
  • +2,000 FVV5 110/110.5 1x2 call spds, 0.5

While broader G10 FX ranges are muted, GBP/USD has improved to the best levels of the session, hitting 1.3536 to narrow the gap with the post-payrolls highs of 1.3555. Clearance here would put the price at new monthly highs and within range of 1.3595 - clustered horizontal resistance.

• Currency markets have proven more sensitive to volatility in the longer-end in recent weeks - of particular relevance to GBP given the uptrend in 30y UK Gilt yields - a recent triangle breakout on the daily chart reinforces this theme. Sensitivity here
• As such, politics and the near-term fiscal trajectory of the UK are to remain a key driver for markets here. Keir Starmer's reshuffle will likely be ineffectual for markets given Chancellor Reeves remains in place headed into the November 26th Autumn Budget, although recent appointments of economic advisers to No. 10 have raised some speculation that Reeves' influence over economic policy may have waned.
• As a result, sell-side remain cautious on GBP - however the vast majority prefer long EUR/GBP exposure over exposure to USD given the building pricing of a Fed Sept cut of potentially more than 25bps. This is despite sell-side pushing out expectations of BoE rate cuts this year (see Deutsche Bank, HSBC earlier today) - an extension of which could work against the consensus view of EURGBP higher. Key support to watch lies at 0.8597, the Aug 14 low. Clearance of this level would reinstate the recent bearish threat for the cross.