US TSYS: Late SOFR/Treasury Option Roundup: Large Oct'25 10Y Call Buyer

Powell on the US consumer: 

• "Consumer spending has been very, very strong for the last couple of years and ... repeatedly forecasters, not just us, had been forecasting it would slow down.
• And now maybe it finally has.... essentially you have a consumer that's in good shape and is spending, not at a rapid rate... it's one of the data points that we pay most careful attention to. And there's no question that it's slowed. And we are watching it closely."

On that note, Powell says it's "really hard to say" whether there will be enough information to cut in September. Asked about the what the Fed is looking for in the data:

• "If you saw that the risks to the two goals were moving into balance, if they were fully in balance, that would imply that you should move toward a more neutral stance on policy. This is the special situation we are in, which is, we have two-sided risks... When we paused, inflation was above target and the labor market was pretty good.... As the two targets get back into balance, you would think you would move it in a way closer to neutral and the next steps that we take are likely to be in that direction.
• What will it take? It will be the totality of the evidence. As I mentioned, there's quite a lot of data coming in which before the next meeting, will it be dispositive of that? You know, it's really hard to say. We don't make those decisions right now. So, we will have to see."

• Treasury futures are extending lows now, curves bear flattening as projected rate cuts into year end continue to cool.
• Futures extending past this morning's ADP/GDP/Core-PCE lows: Sep'25 10Y futures currently trades -12 at 110-31.5 (110-31 low, 111-14.5 high). Key support is 110-08+, the Jul 14 and 16 low. Clearance of this level would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.
• Curves shift to flatter: 2s10s -1.814 at 43.131, 5s30s -1.397 at 94.131.
• Cross asset: Stocks retreating (SPX eminis -26.0 at 6380.25), Gold weaker at 3279.0, Bbg US$ index remains bid: 1218.77 (+8.79).