SILVER TECHS: Impulsive Bull Wave

SOFR & Treasury option volumes rather muted despite UK return from spring holiday, leaning towards low delta put structures earlier. Underlying futures mixed, curves steeper with short- to intermediate rates rising after EU trade headline (will target E100B US goods if negotiations fail). Projected rate cut pricing gains slightly vs. late Monday levels (*) as follows: May'25 steady at -0.5bp, Jun'25 at -8.4bp (-7.3bp), Jul'25 at -25.2bp (-23.3bp), Sep'25 -45.3bp (-42.2bp).

• SOFR Options:
  • 2,500 SFRN5 95.68/95.75/95.87 2x3x1 put flys
  • 5,000 SFRK5 95.75/95.81 put spds ref 95.795
  • 6,000 SFRN5 96.25/97.25 call spds ref 96.15
  • 3,000 SFRV5 95.62/95.75 2x1 put spds
  • 2,500 SFRM5 95.75 puts ref 95.79
  • 2,000 SFRK5 95.75/95.87 strangles, ref 95.785
• Treasury Options:
  • 1,000 FVM5 107.25/108.25 put spds vs. 108.25/109.25 call spds ref 108-12
  • over 5,300 wk2 TY 110.5 puts, 9 ref 110-29.5 (exp 5/9)
  • 1,600 TYM5 109.25 puts, ref 111-00

Chris Lunday at Politico posts on X: "A second chancellor vote is back on the table. CDU/CSU and SPD are discussing a second round today with Greens and the Left party. All four factions began a meeting at 1 PM [half an hour ago]. No formal request yet". Taggespeigel notes the process that would be required in order for a second vote to take place today "An election today would definitely require a shortened deadline, for which the CDU/CSU and the SPD are dependent on the other parties. According to information from parliamentary sources reported to Tagesspiegel, all parliamentary groups would have to agree to a shortened deadline. To subsequently schedule a second round of voting, only a two-thirds majority of parliamentarians is required, meaning the rules of procedure, which prohibit such short-notice scheduling of agenda items, are not applied. The CDU/CSU and SPD, along with the Greens and the Left Party, would have this majority."

• The possible obstacle here is the fact that all parliamentary groups have to agree to a shortened deadline, even if only a 2/3 majority is then required to schedule a second round of voting on a chancellor. The 'grand coalition' parties may prove unwilling to rely on the far-right Alternative for Germany (AfD) even its support would expedite a swifter election process.
• Such an agreement would also break the CDU/CSU's long-standing policy of not working with the far-left Die Linke at the federal level. 

• In the FI space, Bund futures continue to trade below their recent highs. Despite the latest move down, a bull cycle is in play and the sell-off between Apr 7 - 9 is considered corrective. Sights are on resistance at 132.03, the Apr 7 high and a bull trigger. Clearance of this level would confirm a resumption of the uptrend and open 132.56, the Feb 28 high. Firm support lies at 130.52, the 50-day EMA.
• A bull cycle in Gilt futures remains intact and short-term weakness is - for now - considered corrective. Today’s low print has resulted in a test of support at the 50-day EMA, at 92.46. A clear break of this average would signal scope for a deeper retracement and expose 91.73, the Apr 17 low. On the upside, a resumption of gains would open 94.50, the Apr 7 high and a key resistance. Initial firm resistance to monitor is 93.93, the May 2 high.