US TSYS: Late SOFR/Treasury Option Roundup
Decent SOFR/Treasury option volumes as trade talk saw underlying futures reverse course - chunky call sales after Pres Trump said no when asked if China tariffs will stand - turned two way in the second half. Projected rate cut pricing has reversed course on the move, softer vs. late Thursday levels (*): Oct'25 at -25.3bp (-25.8bp), Dec'25 at -50.9bp (-52.4bp), Jan'26 at -64.8bp (-67.3bp), Mar'26 at -77.9bp (-81.6bp).
- SOFR Options:
- +10,000 SFRG6 96.68/96.81/96.87/97.00 call condors, 1.75
- +11,000 SFRX5 96.75/96.87 call spds, cab ref 96.39
- +4,000 SFRX5 96.62/96.75/96.87 call flys, cab
- Block, 5,000 SFRZ5 96.25/96.37 2x1 put spds, 1.5 net ref 96.385
- -7,500 SFRZ5 96.25/96.37 put spds, 3.5 vs. 96.395/0.24%
- -4,000 SFRU5 96.25/96.75 3x1 put spds4.25-4.5
- +12,000 SFRH6 96.12/96.18 put spds, 0.5 trg 96.655
- +5,000 0QZ5 97.00/97.12/97.25 call flys, 1.75 ref 97.085
- Update, 10,000 SFRU5 96.00/96.75 put spds vs. 30,000 96.25/96.50 put spds, 2.5 net package
- +12,000 0QZ5 96.75 puts, 3.0 vs. 97.075/0.16%
- -22,000 SFRX5 96.87 calls, .75
- 3,000 SFRX5 96.50/96.56 call spds
- Block, 3,000 SFRZ5 96.50/96.62/96.75 call flys, 1.0
- 3,000 SFRU6 96.00/96.25/97.00/97.25 put condors ref 97.105 to -.095
- Block, 4,000 0QX5 96.75 puts, 0.5 vs. 97.11/0.10%
- Block/screen, 10,000 SFRM6 96.18/96.31/96.37/96.50 put condors, 1.5
- 4,000 SFRH6 96.37 puts ref 96.71
- 9,500 0QZ5 97.00/97.12 call spds ref 97.15
- 2,000 3QZ5 97.25/97.50 call spds ref 96.83
- 2,000 SFRX5 96.25/96.31/96.43/96.50 call condors ref 96.425
- +5,000 SFRX5 96.62/96.75/96.87 call flys, 0.5 ref 96.43
- 1,500 SFRH6 96.87/97.00 call spds vs. 96.56/96.62 put spds
- +4,000 SFRX5 96.62/96.75 call spds, 1.0 ref 96.43
- Block, 5,000 SFRX5 96.12/96.25/96.50 call trees, 7.25
- Block/screen, -10,000 SFRH6 96.37/96.50 call spds, 8.25 vs. 96.715
- +2,000 SFRZ5 96.43/96.62 call spds, 4.0 ref 96.425
- +22,000 SFRU6 96.81/97.12 2x1 put spds, 1-2 ref 97.07
- +2,800 SFRX5 96.25/96.37 put spds, 2.75 ref 96.425
- Treasury Options:
- +15,000 TYX5 114 calls, 10
- -10,000 TYZ5 112.5/115 strangles, 36 ref 113-14.5
- 5,000 TUZ5 103.5/104/104.37broken put flys
- 1,765 USZ5 114/116 2x1 put spds, 6 ref 118-20
- 2,000 FVX5 109.5/109.75 put spds ref 110-03.5
- 2,000 TYX5 113.5/114/114.5/115 call condors ref 113-28.5
- -1,500 TYZ5 114 straddles, 136 ref 113-30
- +10,000 FVZ5 111.75 calls, 8.5-9 ref 110-04.25 to -04.5
- +3,000 FVZ5 110.5 calls, 20.5 ref 110-04
- +10,000 TYZ5 112/113 2x1 put spds 6 ref 113-31 ref 113-31
- -2,000 wk3 TY 114/114.25 call spds, 4 ref 113-29.5
- 1,900 TYZ5 115/116 call spds ref 113-26.5
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FED: Powell Says Today's Decision Focused On Risks To Labor Market
- Asked if there are upside risks to the labor market given apparently strong economic activity: "that would be be great, we'd love that to happen."
- He notes that consumption is coming in stronger than expected (apparently in reference to this week's retail sales release), and "also a fairly narrow sector is producing a lot of economic activity, which is the the AI build out, and, business investment.,, we did move up the median for growth for this year between the June and September SEP. And really, the inflation and labor market didn't change much. It's really the risks that we're seeing to the labor market that were the focus of today's decision."
FED: Powell Says Not Just Payrolls Data That Shifted The FOMC To Cutting
Powell says it wasn't just the payrolls data that shifted the Committee into supporting cuts since the July meeting:
"a wide assessment that the situation has changed with respect to the labor market... I think that the new data that we've had, and it's not just payrolls, it's other things as well, suggest that there really is meaningful downside risk."
He also says it's "not obvious what to do" with policy: "it's not a bad economy or anything like that. We've seen much more challenging economic times, but from a policy standpoint, the standpoint of what we're trying to accomplish, it's challenging to know what what to do. There are, as I mentioned earlier, there are no risk free paths. Now it's not incredibly obvious what to do."
GBPUSD TECHS: Recovery Extends
- RES 4: 1.3893 1.236 proj of the Aug 1 - 14 - Sep 3 price swing
- RES 3: 1.3789 High Jul 1 and key resistance
- RES 2: 1.3753 High Jul 2
- RES 1: 1.3726 High Sep 17
- PRICE: 1.3653 @ 20:06 BST Sep 17
- SUP 1: 1.3523 20-day EMA
- SUP 2: 1.3487/3430 50-day EMA / Low Sep 5
- SUP 3: 1.1.3333 Low Sep 3
- SUP 4: 1.3142 Low Aug 1 and a key support
A bullish theme in GBPUSD remains intact and price is trading higher this week. The pair has breached resistance at 1.3595, the Aug 14 high and a bull trigger. The break strengthens bullish conditions and opens 1.3789, the Jul 1 high and a key resistance. Initial firm support to watch is 1.3487, the 50-day EMA. A clear breach of the EMA would highlight a potential reversal and signal scope for a deeper retracement.
