AMERICAS OIL: GAS PIPE ALERT: IROQUOIS GAS CAPACITY CONSTRAINT: BBG

• Treasury futures continue to extend the low end of the day's range in late trade, TYH5 briefly traded through 108-16.5 support before bouncing to 108-17 after the bell. Curves steeper with short end rates outperforming (2s10s now at 25.015 vs. 19.960 low) - despite late 2s5s flattener block in late trade: 17,300 TUH5 102-21.38, slightly through the 102-21.25 post time offer vs. 15,300 FVH5 106-04.37, well through the 106-03.75 post time offer.
• Meanwhile, projected rate cuts into early 2025 look steady to slightly lower vs. this morning (*) as follows: Jan'25 steady at -2.1bp, Mar'25 -11.7bp (-13.7bp), May'25 -16.0bp (-18.8bp), Jun'25 -23.4bp (-25.3bp).
• Little reaction to a flurry of mixed data: November posted improved home sales figures compared with a soft October, but revised New home sales came in roughly as expected at 664k on a seasonally-adjusted annualized rate, up from 627k prior (upwardly revised from 610k), following on from data showing a 4.8% M/M increase in existing home sales in November to the highest level since March at 4.15M.
• Headline durable goods orders figure of -1.1% M/M, the "miss" vs -0.3% expected was offset by an upward revision to the prior growth reading to 0.8% from 0.3%. Transportation equipment - a typically volatile category - led the decline, falling -2.9% M/M, with nondefense aircraft/parts down 7.0%.
• Tsy $69B 2Y note auction (91282CME8) came out on the screws: 4.335% high yield vs. 4.335% WI; 2.73x bid-to-cover vs. 2.77x prior. Tuesday sees Tsy $28B 2Y FRN & $70B 5Y Note auctions.

Option desks reported a modest pick-up in SOFR & Treasury put options in the second half while underlying futures continue to extend the low end of the day's range. Curves steeper with short end rates outperforming (2s10s now at 24.813 vs. 19.960 low), while projected rate cuts into early 2025 look steady to slightly lower vs. this morning (*) as follows: Jan'25 steady at -2.1bp, Mar'25 -11.7bp (-13.7bp), May'25 -16.0bp (-18.8bp), Jun'25 -23.4bp (-25.3bp).

• SOFR Options:
  • +10,000 SFRU5 95.62/95.81 call spds 1.0-1.25 over 96.06/96.31 call spds
  • +7,500 SFRZ5 96.50/97.00/97.50/98.00 call condors 6.0 ref 95.97
  • -5,000 SFRJ5 95.81 puts 7.75-8.0 over the 95.87/96.12/96.37 call fly
  • 4,900 SFRM5 96.12/96.37 call spds ref 95.89
  • 2,300 SFRM5 96.50/96.62 call spds ref 95.89
  • 1,300 SFRU5 96.00/96.18 call spds vs. 95.37 puts ref 95.955
• Treasury Options:
  • 10,000 TYF5 108.25/108.5 put spds 4 ref 108-19
  • -5,000 USF5 113/113.5 put spds 9 ref 113-27
  • -12,000 TYG5 111 calls, 9 ref 108-23.5
  • 4,250 TYG5 108 puts, 30 ref 108-24.5
  • over +56,500 TYG5 104 puts, 3 ref 108-26.5
  • 1,500 TYG5 103.5/107.5 put spds vs. 112 calls ref 108-25.5
  • 2,600 TYG5 103 puts, 2 ref 108-26.5
  • 2,300 TYH5 114 calls, ref 108-26.5
  • 2,100 FVH5 106.25 calls ref 106-07.75
  • 2,500 TYG5 113 calls

• RES 4: 166.10 High Nov 6   
• RES 3: 165.04 High Nov 15 and a key short-term resistance 
• RES 2: 164.21 76.4% retracement of the Oct 31 - Dec 3 bear leg  
• RES 1: 163.80 High Dec 19
• PRICE: 163.44 @ 16:39 GMT Dec 23
• SUP 1: 161.65/159.82 20-day EMA / Low Dec 18  
• SUP 2: 158.67 Low Dec 11
• SUP 3: 157.87 Low Dec 09
• SUP 4: 156.18 Low Dec 03 and the bear trigger

EURJPY is holding on to its recent gains and a bullish theme remains intact. The cross has traded through 162.48 the Dec 17 high, to confirm a resumption of the recovery that started on Dec 3. A continuation higher would signal scope for an extension towards 164.21, the 76.4% retracement of the Oct 31 - Dec 3 bear leg. Key short-term support has been defined at 159.82, the Dec 18 low. A break of this level is required to signal a possible reversal.