EURIBOR OPTIONS: Large Call Fly Strip seller

• RES 4: $4969.0 - 20-day EMA
• RES 3: $4899.7 - 50-day EMA 
• RES 2: $4735.7 - High Mar 20  
• RES 1: $4655.7 - Low Feb 6                        
• PRICE: $4215.2 @ 07:45 GMT Mar 23 
• SUP 1: $4099.2 - Intraday low
• SUP 2: $4000.00 Round number support
• SUP 3: $3945.2 - 1.236 proj of the Jan 29 - Feb 2 - Mar 2 price swing
• SUP 4: $3771.1 - 1.382 proj of the Jan 29 - Feb 2 - Mar 2 price swing

A bear cycle in Gold remains intact and today’s extension reinforces this theme, and confirms a resumption of the bearish cycle that started Jan 29. Sights are on the $4000.0 next. Further out, the break lower signals potential for an extension towards the $3945.2, a Fibonacci projection. Note that the short-term trend condition is currently oversold, a recovery would allow this to unfold. Initial resistance is at $4655.7, the Feb 6 low.

Another round of hawkish repricing in GBP STIRs as markets adjust to the ultimatum issued by U.S. President Trump to Iran re: reopening the Strait of Hormuz.

• SONIA futures 1.0-12.5 lower. SFIZ6 pierces the ’23 low (95.265). A clean break there would 95.00, which protects the ’22 low (94.790).
• BoE-dated OIS pricing over 90% odds of a 25bp rate hike being delivered next month, with 97bp of cumulative tightening priced through year-end.
• UK flash PMI data is due tomorrow, with CPI readings due Wednesday.
• UK CPI for February (pre-Iran conflict) is generally expected to remain at the 3.0%Y/Y level when rounded (the BoE's February MPR forecast also rounded to 3.0% at 2.954% Y/Y). As this is a pre-conflict print, the potential for it to be hugely market moving is much diminished but an upside surprise would likely reinforce concerns that hikes are needed while a downside surprise is unlikely to alleviate fears of second round inflationary impacts from energy prices. The biggest uncertainty in this print is likely from the introduction of grocery scanner data which will cover approximately 50% of the grocery market.
• Expect geopolitical matters to continue to dominate.

German February standalone data released Friday shows a (typical) slowdown in the core budget deficit vs January. Special fund takeup (infrastructure / military) seems on net a bit slow thus vs the targeted 2026 pace following ongoing questions around realized net fixed government investment. Jan-Feb YTD still shows shows elevated core budget spending, weaker tax revenue, and a resulting wider deficit compared to last year. Core budget fixed investments are down on a Y/Y YTD basis.

• In the core budget, the budget deficit reached E33.7bln YTD (34.4% of FY26 plan of E98.1bln), with a Feb-only deficit of E5.4bln (vs. E28.3bln in Jan). This was the largest February deficit since 2022 (E6.1bln) and means a comfortable pick-up from last Feb's E2.7bln.
  • YTD expenditures increased 9.6% Y/Y to E93.1bln with February seeing E38.3bln of expenditure, a slowdown from January's E54.8bln. Key drivers of the E8.1bln increase on a YTD basis:
    • Investments +E4.8bln to E9.5bln (+104.2% Y/Y, "investments" is a special aggregate which overlaps with other categories) however that spike is, to a large extent, driven by loan disbursements to unemployment insurance and care insurance.
    • Fixed investment is in fact down YTD by E0.1bln or 13.9%. For FY26, the government plans ~5% investment growth to E58.4bln.
    • This is another datapoint highlighting questions around the realized pick-up in German government investments. Follows renewed IFO calculations earlier this week on a 95% 2025 misappropriation of SVIK funds.
    • Elsewhere on YTD expenditure drivers, military saw +E3.3bln (E11.8bln vs E8.6bln '25; +38.1% Y/Y vs 39.5% planned pickup FY26)
    • Partially offset by: electricity price subsidies decreased E1.4bln, transport and communication spending E0.9bln
  • YTD federal revenues decreased 6.5% Y/Y to E59.4bln, out of these revenues, E32.9bln came from February. February revenues were comparatively higher than Jan, with the tax share received by the federal (not equivalent to the taxes raised by the federal as per "shared taxes") falling only 2.9% Y/Y in Feb vs -7.5% YTD. The Finance Ministry notes tobacco and import VAT declines were distorted by booking effects shifting revenue into March. Higher incomes taxes were a key driver behind the February pick-up.
• Special fund credit takeup was overall rather modest in February: The SVIK (infra) fund took up E3.2bln of credit last month after January's E5.0bln (meaning the YTD pace is pretty close on target for the E48.1bln 2026 plan excl. a E10bln transfer to the KTF climate fund) while the military fund continues to run much slower than targeted at E0.5bln takeup in Feb (after January's E0.6bln; E25.5bln 2026 target).