OPTIONS: Larger FX Option Pipeline
May-07 11:58
- EUR/USD: May08 $1.1200(E2.5bln), $1.1250(E1.5bln), $1.1390-00(E3.0bln), $1.1420-25(E1.3bln); May09 $1.1300(E1.3bln), $1.1375-85(E954mln), $1.1400-10(E1.1bln)
- USD/JPY: May08 Y142.00($1.1bln), Y143.00($1.6bln), Y145.00($1.3bln); May09 Y145.00($1.8bln); May12 Y142.45-50($1.0bln)
- USD/CAD: May09 C$1.3700($1.2bln), C$1.3750($1.2bln)
- USD/CNY: May08 Cny7.4500($1.5bln)
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US TSY FUTURES: BLOCK: Jun'25 2Y Sale
Apr-07 11:50
- -2,500 TUM5 104-06.62, sell through 108-75 post time bid at 0738:00ET, DV01 $92,000. The 2Y contract trades 104-07.38 last.
GERMANY: Public Sector Deal Supports Slowing Negotiated Wage Growth Expectations
Apr-07 11:49
Wage negotiations in the public sector (federal and municipal level, impacting 2.7mln employees, ~6% of total employment) ended with a two-stage salary increase of 3% or a minimum of E110/month retroactively starting on April 1, and a further 2.8% starting May 1 2026, alongside some shift allowance increases and a softening of the maximum working hours in a 27-month contract maturity in March 2027.
- UBS calculates that the public sector wage deal equates to average annual wage growth in the sector of 2.8% in the next two years. We note that this is higher than:
- average Y/Y services sector negotiated wage growth 2011-19 (2.4%)
- the Bundesbank's forecast for German negotiated wage growth in 2025 (2.5%)
- the Bundesbank's forecast for German HICP (2.4% '25, 2.1% '26).
- However, the figures still mark a slower pace of wage growth than seen in recent quarters (services sector excl. one-offs standing at 4.7% Y/Y in March according to Destatis data, see chart below).
- Thus, the takeaway from the deal is that it appears to underpin the ECB's assumption of Eurozone wage growth tapering off going forward - but for the Bundesbank's 2025 forecast to be met, other deals this year have to come in lower than this one, and this agreement remains above pre-pandemic norms.
EURIBOR OPTIONS: Summary Of Latest Morning Flow
Apr-07 11:42
- ERZ5 99.25/99.75 call spread, now trading at 2.25. 20k sold all day at 2.5 down to 2.25
- ERK5 98.125/98.25 call spread, bought for 1.25 in 15k.
- ERM5 98.125/98.25 call spread has traded in 30k at 1.25. Paper has both bought and sold this structure.
