OPTIONS: Expiries for Jan19 NY cut 1000ET (Source DTCC)

• US TSY 17W BILL AUCTION: HIGH 3.540%(ALLOT 87.73%)
• US TSY 17W BILL AUCTION: DEALERS TAKE 26.04% OF COMPETITIVES
• US TSY 17W BILL AUCTION: DIRECTS TAKE 6.51% OF COMPETITIVES
• US TSY 17W BILL AUCTION: INDIRECTS TAKE 67.46% OF COMPETITIVES
• US TSY 17W BILL AUCTION: BID/CVR 3.27

Reuters reports comments from Brazilian President Luiz Inacio Lula da Silva, stating that "If we do not finalise the EU-Mercosur trade deal right now, Brazil will not sign it as long as I am president." He adds that "We gave in on everything we could; if the EU doesn't approve the trade agreement now, we will be tough on them." Should Lula maintain his stance into 2026, especially if he wins re-election in the autumn, it could scupper the chances of any EU-Mercosur deal until 2030.

• Addressing the Italian Parliament earlier today, PM Giorgia Meloni said that the planned signing of the deal - 20 years in the making - this weekend was "premature".
• Meloni: "It is necessary to wait for the package of additional measures to protect the agricultural sector to be finalised, explained and discussed with our farmers. This does not mean that Italy intends to block or oppose (the deal)...I am very confident that with the beginning of the new year, all these conditions can be met.”
• EU ambassadors had been due to vote on Friday, 19 December, on the 'reciprocity clause', intended to ensure agricultural exports from Mercosur countries meet EU standards. Approval would have set up a signing ceremony in Brazil on Saturday, 20 December.
• France, Hungary, Poland, and Austria are all opposed, and should Italy withhold its support, this would deny the required qualified majority in the Council vote.
• Anti-deal MEPs have already threatened a judicial review, potentially pushing implementation until 2028 at the earliest.
• European Trade Commissioner Maroš Šefčovič warned that approving the FTA "is a matter of the credibility and predictability of the EU". Šefčovič: “If we cannot take such an important decision on this type of deal, then I can imagine that it could sow doubt in our negotiating partners’ minds”.

• Stocks have reversed modest early gains to weaker, extending lows by mid-late morning Wednesday - following the same path over the last three consecutive sessions as longs took profits ahead of the Christmas & New Years holidays.
• Currently, the DJIA trades down 45.4 points (-0.09%) at 48079.15, S&P E-Mini Futures down 41 points (-0.6%) at 6815.5, Nasdaq down 237.3 points (-1%) at 22879.1.
• Information Technology, Communication Services and Industrials sector shares led declines ahead of midday:
  • Oracle -5.91%, Broadcom -5.11%, Dell Technologies -5.04%, Super Micro Computer -4.71%, Western Digital -3.85%, Seagate Technology -3.55% and NVIDIA -3.51%.
  • Merger/acquisitions continued to make headlines as Paramount Skydance trade down -4.62% after Jared Kushner's private equity firm pulled out of the hostile takeover bid for Warner Brothers, the latter also down 1.0%. Warner executives implored investors to reject the $108B Paramount bid, calling it "illusory" in favor of Netflix's superior offer.
  • GE Vernova -6.70%, Caterpillar -4.23%, Eaton Corp -4.09%, Quanta Services -3.35% and EMCOR Group -3.20% weighed on the Industrials sector.
• On the positive side, Energy and Consumer Staples sector shares outperformed in the first half:
  • Texas Pacific Land +8.08% after signing an agreement with Bolt Data to build data centers, Devon Energy +3.76%, ConocoPhillips +2.48%, Diamondback Energy +2.41% and Occidental Petroleum +2.24%.
  • Meanwhile, General Mills +3.45%, Church & Dwight +3.09%, Kroger +2.21% and Procter & Gamble +2.06% buoyed the Consumer Staples sector in the first half.