EU CAPITAL GOODS: General Electric: 2Q25
(GE; A3/A-/NR)
Strong results as macro tailwinds continue to benefit GE.
• 2Q EPS of $1.66 beat estimates of $1.43 as revenues were up 21% y/y to $11.0bn.
• Results were driven by GE's Commercial segment with a 30% y/y revenue gain which was 8% higher than estimates. Orders for the segment were also up 28% y/y with strong growth in Services orders.
• Commercial services revenues were +29% y/y while total engine deliveries were up 45% y/y.
• Overall EBIT of $2.337bn was up 23% y/y as operating margins were up 10bps q/q to 23.0% primarily driven by the Commercial segment.
• GE raised FY25 guidance with revenues expected to be +mid-teens % vs previous expectations of "low-double-digits" while adjusted EPS guidance was raised approximately 8% to $5.60-$5.80/share.
• FCF was $2.1bn in the quarter and GE expects FCF of $6.5bn-$6.9bn for FY25 (+9.8% y/y).
• GE hasn't issued bonds since 2021 and only has $300mm maturing in Nov 2025 and $900mm in May 2026.
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SOFR OPTIONS: Post-Data Flow
Call spread selling, conditional curve plays while underlying futures continue to scale back from post-data highs. White pack (SFRM5-SFRH6) trades steady to -.005. Projected rate cut pricing consolidates slightly from earlier levels (*) as follows: Jun'25 at 0.0bp, Jul'25 at -3.1bp (-3.6bp), Sep'25 at -18.2bp (-19.5bp), Oct'25 at -31.1bp (-32.6bp), Dec'25 at -47.3bp (-48.8bp).
- -10,000 0QZ5 97.50/97.62 call spds, 1.75 vs. 96.73/0.05%
- +2,500 SFRZ5 96.37/96.75 call spds vs. 0QZ5 97.25/97.50 call spd, 1.5 net/steepener
- +2,500 SFRN5 95.37/95.68 put spds, .37
- -4,000 SFRU5 95.68/95.81/96.25/96.37 call condors, 5.25 ref 95.875
EQUITIES: Lloyd's outright call seller
LLOY (20th June) 68c, sold at 8.20 and 8 in 3k.
- This could be closing, there's 3k OI at that strike.
- Also noted Yesterday, there's £3.05bn worth of Notional Option Expiry for Friday in Lloyds.
CANADA DATA: Biggest Foreign Divestment Of Canadian Bonds Since 2018
- Foreign investors sold Canadian CAD9.4B Canadian securities in April, including CAD25.1b of bonds that was the largest divestment since Dec 2018. Bond decline largely due to debt retirements.
- Canadian investors purchased CAD4.1B of foreign securities in April.
YTD foreign investment in Canadian securities from Jan to April -CAD15.1B vs +CAD64.3B over the same period last year.
