POWER: French Spot Index Jumps to Highest Since 30 June

"*MANDATE: KINGDOM OF SWEDEN $BENCHMARK 1/2028 BOND OFFERING" Bloomberg

"*NEW DEAL: SWEDEN $BENCHMARK JAN. 2028 BOND SOFR MS+30 AREA" Bloomberg

• This is the second foreign currency syndication of the year. In June, Sweden sold E2bln (~SEK21.8bln) of the 2.00% Jun-28 Sweden EUR bond.
• Riksgalden's May borrowing report noted that "the Debt Office will issue two foreign currency bonds in 2025 instead of one. The two loans together correspond to around SEK 39 billion. In keeping with the plan from November, we are also planning a loan in 2026 corresponding to approximately SEK 19 billion".
• With the EUR sale earlier this year raising almost SEK22bln, a transaction size totalling USD1.75-2.00bln (i.e.around SEK16.5 - SEK19bln) seems reasonable.
• A reminder that Riksgalden's November borrowing report, which will have to account for the Government’s expansionary 2026 budget plans, will be released in late November. 

The USD Index heads into the NY crossover at the highest levels of the day, topping Friday's high in the process. This puts EUR/USD briefly back below 1.1650 and has GBPUSD testing the 1.34 handle, adding to the evidence that the USD found a base on the back of Trump's optimism around a China deal, particularly as he called additional tariffs on Chinese imports as "not sustainable".

• With no tier one data due this week until Friday's rescheduled CPI print, and the Fed inside the media blackout period, market focus remains on geopolitics and leaders' meetings in the coming weeks (particularly Trump-Xi next week) and any prepwork that may take place this week.
• Vol markets are under pressure - particularly at the front-end of the curve. EURUSD one-week implied is pressured well toward YTD lows and saw very little benefit from capturing Friday's inflation print. This may signal markets seeing CPI as pretty inconsequential, particularly as the government shutdown drags on and the Fed's cutting cycle is well priced for 2 consecutive 25bps rate cuts.

Option desks reported mixed flow on modest overnight volumes. Treasury futures are holding mildly weaker, TYZ5 inside a narrow 4pt overnight range as the US Gov enters shutdown day 19. The Federal Reserve now in policy Blackout as of Late Friday through October 30. Projected rate cut pricing cools slightly vs. late Friday levels (*): Oct'25 at -24.7bp (-25.3bp), Dec'25 at -50.1bp (-50.9bp), Jan'26 at -63.7bp (-64.8bp), Mar'26 at -77.2bp (-77.9bp).

• SOFR Options:
  • over +12,500 SFRZ5 96.12 puts, 0.5 ref 96.365/0.05%
  • +2,500 SFRX5 96.75/96.87 call spds, cab
  • -4,000 SFRZ5 96.25/96.37 call spds, 8.5
  • +2,000 SFRM6 96.25/96.37 put spds, 2.0 ref 96.87
  • 1,600 SFRH6 96.31/96.43 put spds
  • 1,500 SFRM6 96.25/96.62/97.00 call flys
  • +8,000 SFRG6 96.68/96.81/96.87/97.00 call condors, 1.75 ref 96.625 to -.63
• Treasury Options:
  • over 5,000 TYX5 113.5/118 call spds on ratio
  • over 5,000 FVX5 109.5 puts, 5.5 last
  • -2,000 TYF6 113.5 straddles, 200 vs. 113-09/0.06%
  • 5,900 TYX5 113 puts, 7-8 ref 113-13.5/0.08%
  • -5,000 TUZ 104.75 calls, 5 ref 104-13
  • +3,000 TYH6 107.5/109 put spds, 6
  • 3,000 TYF6 110/112 put spds, 23 vs. 113-11/0.20%