USDJPY TECHS: Has Cleared The Bear Trigger

SOFR and Treasury options leaning towards low delta put structures overnight (aside from some SOFR midcurve call plays), picking up cheaper downside insurance as underlying futures continue to gain. Projected rate cuts through mid-2025 gaining vs. late Monday levels (*) as follows: Mar'25 at -3.1bp (-1.8bp), May'25 at -14.0bp (-10.2bp), Jun'25 at -31.0bp (-26.0bp), Jul'25 at -42.6bp (-35.3bp).

• SOFR Options:
  • Block, 4,000 96.62/96.75 call spds 4.5 vs. 96.59/0.08%
  • over 7,600 0QM5 97.25/97.50 call spds ref 96.535
  • over 38,900 SFRZ5 95.62 puts - partly tied to flys/condors below
  • 5,000 SFRZ5 95.37/95.62/95.87/96.12 put condors
  • 7,350 SFRZ5 95.12/95.62/96.12 put flys ref 96.385
  • over 10,000 0QH5 96.50 calls ref 96.475
  • 5,000 0QM5 97.25/97.50 call spds ref 96.52
  • +4,000 SFRZ5 96.00/96.25 put spds, 11.5 ref 96.385
  • +4,000 SFRZ5 96.50 calls, 30.0 ref 96.38
  • 4,800 SFRZ5 95.93/96.12 put spds ref 96.38
  • 5,000 SFRH5 95.75/95.87 call spds
  • 5,000 2QH5 96.25/96.37 put spds ref 96.51
  • Block, 3,716 SFRM5 96.00/96.25 call spds, 6.0 ref 95.99
• Treasury Options:
  • -12,000 wk1 TY 111/112.5/113.5 broken call flys, 2 ref 111-22, exp this Friday
  • 24,800 TYJ5 109.5 puts, 6, total volume over 42,600
  • over 8,700 USJ5 117.5 puts, 45 last
  • over 8,000 USJ5 119.5 calls, 1-10 last
  • 9,100 TYJ5 107/108 put spds ref 111-18
  • 3,000 TYJ5 109/109.5 3x2 put spds ref 111-18 to -18.5
  • 3,125 FVJ5 107.25 puts ref 108-09.25

At ~1425GMT (0925ET, 1525CET), Chancellor of the Exchequer Rachel Reeves will take part in a fireside chat at the MakeUK manufacturers' association conference. Reports claim Reeves intends to use the event to “fire up Britain’s industrial base” to boost arms production and to cut red tape to facilitate faster procurement of defence equipment. 

• The latest 'important issues' opinion poll from YouGov shows defence and security leaping as one of the top issues facing the country. In the 1-3 March survey, the three most important issues in the minds of respondents remained the same; the economy was raised by 51% of respondents (down 3% from 22-23 Feb), immigration by 46% (+1) and healthcare 38% (+1). Defence and security came in fourth place, raised by 31% of respondents (+4%). This figure is the highest since Russia launched its full-scale invasion of Ukraine in Feb 2022.
• The increased public concern about the UK's defence outlook could ease pressure on PM Sir Keir Starmer after some within his centre-left Labour Party criticised his gov'ts decision to cut aid spending to boost the UK's military capacity, sparking the resignation of one minister.
• Reuters reports comments from the PM's spox. Confirms Starmer held a call with US President Donald Trump on the evening of 3 March. Spox does not confirm if Starmer was informed of Trump's impending decision to pause aid to Ukraine, instead saying, "The prime minister and President Trump are focused on the same outcome, which is delivering a secure and lasting peace in Ukraine".

• +5,000 FVM5 108-12.75, buy through 108-12.5 post time offer at 0726:20ET, DV01 $205,000. The 5Y contract trades 108-11.5 last (+8.75).