EU CONSUMER CYCLICALS: Flutter: UK Tax Increase

• In the FI space, Bund futures traded sharply lower last week and the contract maintains a softer tone, for now. The move down is considered corrective and is allowing an overbought trend condition to unwind. Initial key support at 129.43, the 20-day EMA, has been breached. This exposes the 50-day EMA, currently at 129.06. For bulls, a reversal would refocus attention of the key resistance at 130.59, the Oct 17 high. First resistance is at 130.07, Friday’s high.
• A bull cycle in Gilt futures remains intact and last week’s gains strengthen the bullish condition. The clearance of 93.17, the Oct 17 high, confirms a resumption of the uptrend and signals scope for an extension towards 93.95 next, a 1.500 projection of the Sep 3 - 11 - 26 price swing. Note that the contract is overbought, a deeper pullback would allow this condition to unwind. Firm support to watch lies at 92.24, the 20-day EMA.

• As equities broadly consolidate their surge higher to start the week, the USD is trading on the back foot, with the likes of EUR and GBP rising to session highs in recent minutes, playing catch up to the AUD, which continues to outperform on the session.
• For EURUSD, although signs appear nascent, the pair has found support below the 1.1600 handle and a positive close today would be the fourth consecutive winning session. As noted above, markets will continue to monitor key support at 1.1542. JP Morgan hav noted that a close above 1.1710 would bolster their long bias conviction. In the crosses, EURCHF has bounced around 50 pips from the key medium-term support around 0.9210.
• GBPUSD has returned to 1.3350, however the string of losing session last week keeps a bearish threat present. EURGBP has been consolidating back above 0.8700, but will need a break above 0.8769 to confirm a resumption of the uptrend.
• Greenback price action has allowed USDJPY to fade further, after the overnight high practically matched the key resistance point at 153.27. The weaker dollar index sees spot gold off its worst levels, despite remaining down 1.9% on the session.

SOFR/Treasury options flow leaning toward downside puts outright & spread, modest overall volumes on day 27 of the US gov shutdown. Underlying futures modestly lower/off lows ahead two bill and Tsy coupon auctions today. Projected rate cut pricing vs. late Friday levels (*): Oct'25 steady at -24.2bp, Dec'25 at -49.4bp (-50.2bp), Jan'26 at -62.2bp (-63.7bp), Mar'26 at -73.5bp (-75.8bp).

• SOFR Options
  • 6,600 SFRZ5 96.50/96.62 call spds ref 96.36
  • 9,000 SFRZ5 96.25/96.37/96.50 put trees, 7.5
  • -2,000 0QX5 96.25/96.75/96.87 put flys, 1.5 vs. 96.97/0.08%
  • 2,500 0QX5 96.75 puts, 0.25 ref 97.005
  • +2,200 SFRX5 96.50/96.56 call spds, 0.25 ref 96.36
• Treasury Options
  • 16,900 Friday wkly 10Y/TYZ5 113 put spd
  • 2,000 TUF6 104/104.25/104.38/104.5 put condors ref 104-14.75
  • +1,250 TYZ5 114 straddles, 119 vs. 113-06/0.43%
  • +1,500 TYZ5 112 calls, 126 vs. 113-09/0.87%
  • +2,500 TYZ5 112.5 puts, 15 vs. 113-09/0.28%
  • -1,200 TYZ5 113.25 straddles, 106-107 vs. 113-05.5/0.05%
  • over -8,000 wk5 TY 113 puts, 10-11, (exp 10/31)
  • -5,000 USZ5 116/118 put spds, 46 vs 117-28/0.28%
  • -2,700 TUG6 104.5 straddles, 34-33