EM LATAM CREDIT: MercadoLibre: New 7-Year Launch

SOFR/Treasury option flow remained mixed Tuesday, modest volumes with SOFR seeing a rise in low delta calls in second half, Treasuries segued to puts. Underlying futures firmer - off highs, curves little changed. Projected rate cut pricing gains slightly vs. late Monday levels (*): Dec'25 at -17.2bp (-16.4bp), Jan'26 at -26.4bp (-24.6bp), Mar'26 at -34.9bp (-32.9bp), Apr'26 at -41.4bp (-39.1bp).

• SOFR Options:
  • Block, 5,000 SFRF6 96.25/96.75 4x5 call spds, 4.5 net - 4 legs over ref 96.435
  • 2,000 SFRZ5 96.25/96.31/96.44 broken call flys ref 96.255
  • -4,000 SFRH6 96.50 calls, 12.0 vs. 96.44/0.42%
  • +5,000 SFRZ5 96.37/96.87 call spds, 1.5 vs. 96.25/0.16%
  • +3,500 SFRM6 96.25/96.31/96.43 put trees, .25
  • 3,000 SFRU6 97.25/98.00 call spds vs. 96.25 puts
  • 2,000 SFRH6 96.37 puts
  • 2,000 SFRZ5 96.12/96.25 2x1 put spds
  • +2,000 SFRX5 96.18/96.25/96.31 put trees, 3.5
  • 4,000 SFRX5 96.18 puts, 1.0 last
  • 1,500 SFRM6/0QM6 96.25/96.50 put spd spd covered, 3.0 net
  • 7,000 0QZ5 97.00/97.25 call spds, 5.5 vs. 96.92/0.25%
• Treasury Options:
  • 6,500 TYZ5 112.75/114 call spds, 36 ref 112-26.5
  • 1,900 FVZ5 109.75/110.5 call spds ref 109-10.25
  • 3,000 TYZ5 112.75 puts, 26 ref 112-24.5
  • 8,000 Wednesday wkly 30Y 118 calls, 5 ref 117-10 (exp 11/5)
  • 3,000 TUZ5 104.25 calls, 5.5 ref 104-05.62
  • 13,000 TUZ5 103.87/104.37/104.5/104.87 broken put condors ref 104-05.5 to -05.62, 7.5 net
  • +1,500 TYZ5 112.5 puts, 20
  • +1,200 TYG6 113 calls, 54 vs. 112-21/0.45%
  • +1,500 TYZ5 113.25 calls, 15 vs. 112-22.5/0.30%
  • +2,000 TYZ5 113.5/114/114.5 1x3x2 call flys, 0.0
  • +1,250 TYZ5 113/113.5/114 call flys, 5 vs. 112-31.5/0.04%
  • +2,000 FVZ5 110.5 calls, 2.5 vs. 109-10.5/0.09%
  • +5,000 TYZ5 111.5/112.25 put spds vs. 113.75 calls, 0.0
  • +2,000 TYZ5 113 calls, 23 vs. 112-26/0.44%
  • +3,500 TYG6 114 calls, 35 vs. 112-25.5/0.30%

European yields fell modestly Tuesday, partially retracing Monday's rise.

• A broader risk-off move helped underpin core EGBs in early trade, but didn't provide a significant boost.
• Regional data was limited, with more focus on fiscal developments in the UK.
• UK Chancellor Reeves' pre-budget appearance appeared to signal incoming tax increases, with the government hoping to pave the way for BOE rate cuts via tighter fiscal policy.
• That helped the UK curve bull steepen lightly, with Germany's bull flattening. Periphery / semi-core EGB spreads widened slightly.
• Wednesday's schedule includes German factory  orders and final services PMIs, along with multiple ECB speakers (including Villeroy and Nagel) and BOE's Breeden not to mention the Swedish Riksbank decision. Focus remains on Thursday's BOE however.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.1bps at 1.997%, 5-Yr is down 1.3bps at 2.255%, 10-Yr is down 1.3bps at 2.654%, and 30-Yr is down 1.4bps at 3.237%.
• UK: The 2-Yr yield is down 1.1bps at 3.784%, 5-Yr is down 0.8bps at 3.899%, 10-Yr is down 1bps at 4.425%, and 30-Yr is down 0.4bps at 5.204%.
• Italian BTP spread up 0.3bps at 74.6bps / French OAT up 0.4bps at 78.2bps  

• RES 4: 180.37 1.500 proj of the Jul 31 - Sep 29 - Oct 2 price swing  
• RES 3: 180.00 Psychological round number
• RES 2: 178.94 1.236 proj of the Jul 31 - Sep 29 - Oct 2 price swing
• RES 1: 178.82 High Oct 30 and the bull trigger
• PRICE: 176.28 @ 16:17 GMT Nov 4 
• SUP 1: 176.10 Low Nov 4
• SUP 2: 175.00 50-day EMA 
• SUP 3: 173.92 Low Oct 6 and a gap high on the daily chart   
• SUP 4: 173.36 Bull channel support drawn from the Feb 28 low  

The trend in EURJPY is bullish and the latest pullback appears corrective. The cross traded to a fresh cycle high last Thursday, confirming a resumption of the primary uptrend. This opens 178.94 next, a 1.236 projection of the Jul 31 - Sep 29 - Oct 2 price swing. Today’s move down has resulted in a breach of 176.65, the 20-day EMA. This signals scope for a deeper correction towards the 50-day EMA, at 175.00. The bull trigger is 178.82, Oct 30 high.