US STOCKS: Late Equities Roundup: Tech Heavy Nasdaq Continues to Outperform

Option desks reported chunky two-way SOFR & Treasury option trade Tuesday, upside call interest evaporating into midday as underlying futures retreated after this morning's ISM Mfg and JOLTS job data. Projected rate cut pricing retreated from early morning (*) levels: Jul'25 steady at -5.3bp, Sep'25 at -28.0bp (-29.3bp), Oct'25 at -44.8bp (-47.3bp), Dec'25 at -63.9bp (-68.4bp).

• SOFR Options:
  • +5,000 SFRU5 95.68/95.87/96.00 put flys, 0.75 ref 95.975
  • +10,000 SFRZ5 98.00 calls, 2.0
  • +5,000 SFRH6 96.12/96.50 2x1 put spds, 5.5
  • 5,000 0QQ5 97.18 calls, ref 96.925
  • Block, 10,000 SFRH6 96.00/96.50 put spds, 18.0
  • over +45,000 SFRU5 95.87/95.93/96.00/96.12 broken call condors, 0.0 ref 96.00
  • 2,000 0QN5 96.68/96.87 put spds ref 96.94
  • 2,000 SFRN5 96.00/96.25 call spds ref 96.005
  • Block, 12,000 SFRQ5 96.00/96.12/96.25/96.37 call condors, 2.5 ref 96.005
  • Block/screen 6,000 SFRU5 95.68/95.75/95.87 2x3x1 put flys, 1.25 net
  • 4,000 0QN5 97.06/97.18 call spds vs. 96.68/96.81 put spds, 0.5 net - call spd over
  • +4,000 SFRZ5 96.00 straddles, 48.0 vs. 96.35/0.52%
  • +2,000 SFRQ5 95.81/95.87/96.00 broken put trees, 4
  • +8,000 SFRU5 96.00/96.12 put spds, 8.5 ref 96.00
  • +2,000 SFRZ5 96.00/96.25 2x1 put spds, 3.25 ref 96.325
• Treasury Options:
  • +10,000 TUU5 105.12 calls, 3
  • 3,500 TYQ5 112.75/113.25 call spds vs. 111.75/112.25 put spds, 5.0 net/puts over
  • Block, 18,900 wk1 TY 111.5/112 put spds, 11.0
  • -4,000 wk2 TY 112.25 straddles, 48 vs. 112-05.5/0.09%
  • 10,000 TYU5 108/110 put spds, 12 ref 112-07.5
  • -15,000 wk1 FV 109.25/109.5/109.75/110 call condors, 3.5 vs. 109-03.5/0.10%
  • +2,500 FVU5 105/106.5 put spds, 2.5 vs. 109-01.25/0.04%
  • +5,000 TYQ5 112.5 calls, 39 vs. 112-10/0.46%
  • +2,000 TYQ5 110.5/112 call spds vs. 109.5/111.5 put spds, 50 net vs. 112-10/0.54%
  • +2,000 TYQ5 109 puts, 3 ref 112-04/0.08%
  • +2,500 TYU5 109.5 puts, 13
  • -1,500 FVQ5 108.5 puts, 14.5 vsd. 109-01.5/0.29%
  • +5,000 TYU5 107/108 put spds, 2 ref 112-10.5
  • +10,000 FVQ5 108 puts, 6.5 ref 109-03.25
  • +2,000 TYQ5 113.25 calls, 23 vs. 112-10/0.60%
  • +5,000 wk1 TY 111.25/111.5 put spds, 3 vs. 112-04.5/0.10

• RES 4: 171.28 1.382 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 3: 171.09 High Jul 23 ‘24  
• RES 2: 170.47 76.4% Fibonacci retracement for Jul - Aug ‘24 downleg
• RES 1: 169.91 1.236 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• PRICE: 169.02 @ 16:23 BST Jul 1 
• SUP 1: 168.46 Low Jul 01 
• SUP 2: 167.21 20-day EMA 
• SUP 3: 165.91 Low Jun 16   
• SUP 4: 165.14 50-day EMA   

The trend set-up in EURJPY is unchanged, it remains bullish and the cross is trading just below its latest highs. Recent gains resulted in a break of 166.69, the Oct 31 ‘24 high. Scope is seen for a climb towards 170.47, a key Fibonacci retracement point. Note that the uptrend is in overbought territory, a pullback would unwind this condition. Support to watch lies at 166.94, the 20-day EMA. A break of it would suggest potential for a deeper retracement.       

There was limited market reaction to the passage of the government welfare reform bill's second reading in Commons, by a vote of 335 to 260. (Earlier, an amendment to scupper the bill was defeated by a count of 328 votes to 149.)

• But this is only after the government announced last-minute concessions to assuage the bill's critics, in which the government would delay changes to disability assessments until a review of the system was complete (due by autumn 2026).
• This latest concession will further winnow the remaining savings intended to be made through reforms, from GBP2bln seen coming into today, and the the originally set-out GBP5bln. (Social Security and Disability Minister Timms said in Commons re the costing of Tuesday's concession, “we’ll set those figures out in the usual way.")
• The implication from the last-minute U-turn is that the government faced defeat of even its watered-down legislation, suggesting limited political scope to cut spending.
• As MNI noted earlier today, "With more spending cuts looking increasingly difficult, this sets up the potential for more tax rises in the Autumn Budget (with the fiscal rules unlikely to be modified while Reeves is Chancellor. The market (and consumers) are likely to continue to worry where these tax rises will come, which isn’t going to be great for confidence over the next few months."