US: MNI POLITICAL RISK - Vought Raises Stakes For FY26 Appropriations
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- At 13:30 ET 18:30 BST, President Donald Trump will swear in IRS Commissioner Billy Long, capping a turbulent period for the agency. At 14:30 ET 19:30 BST, Trump will sign into law the landmark crypto bill, the GENIUS Act, then join Senate Republicans for dinner.
- OMB director Russel Vought is rapidly becoming the central player in Washington.
- The White House confirmed Trump was diagnosed with a chronic vein condition. Trump is struggling to contain fallout from the Jeffrey Epstein case.
- Vought said Trump is unlikely to fire Fed Chair Powell, but kept the door ajar for Powell to be removed if it were determined he misled Congress.
- Treasury Secretary Bessent told Japanese PM Shigeru Ishiba that a good trade deal is possible, with talks set to restart next week.
- The House passed Trump’s rescissions request, setting up a showdown with Democrats over FY26 appropriations. The Senate is looking to wrap up four FY26 bills before the August recess. Avoiding a government shutdown will largely fall to Minority Leader Chuck Schumer (D-NY), who yesterday railed against Vought's influence.
- Bipartisan crypto votes in the House show the industry's growing influence in Washington.
- The White House is yet to release a full Presidential Budget, a break from tradition.
- The Pentagon has pushed back on reports that US strikes failed to neutralise two of the three targeted Iranian nuclear sites.
- Poll of the Day: Confidence in major institutions is near an all-time low.
Full Article: US DAILY BRIEF
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SWAPS: CORRECT: Natixis Recommend German 2s10s Box Narrower
Natixis recommend a German 2/10-Year swap spread box compression trade, looking for a move to -15bp, with a stop set at 0bp.
- They believe that “geopolitical risk has been supporting the widening trend of the Bund swap spread, offering us a chance to fade the move”.
- They see “limited ripple effects from the conflict between Israel and Iran on the long end of swap spread curve. As the 10-Year swap spread gets closer to 0, reallocation flows from U.S. Treasuries to the Bund curve should slowly deter price sensitive investors”.
US TSYS: Early SOFR/Treasury Option Roundup: Carry-Over Calls
SOFR & Treasury option flow continued to revolve around upside calls outright and on spread. Moderate volumes ahead a busy day: house starts/permits, weekly claims (holiday tomorrow) ahead of the FOMC annc this afternoon, TIC flows later. Ongoing Middle East tensions and potential for US to join the fray keeping implied vol anchored. Underlying futures mildly higher, curves flatter while projected rate cut pricing largely steady vs. late Tuesday levels (*) as follows: Jun'25 steady at 0.0bp, Jul'25 steady at -3.6bp, Sep'25 at -17.7bp (-17.7bp), Oct'25 at -29.1bp (-29.6bp), Dec'25 at -45.1bp (-45.2bp).
- SOFR Options:
- 2,000 SFRV5 96.18/96.43 call spds ref 96.09
- 2,800 SFRU5 95.93/96.00/96.06 call flys
- +3,000 SFRU5 95.56/95.62/95.68 put flys, 1.25 ref 95.86
- +12,800 SFRH6 96.50/97.00/98.00 broken call flys, 2.5 ref 96.32 to -.33
- 1,600 3QZ5 96.25/96.62/97.00 call flys, 8.0
- Treasury Options: (July serial options expire Friday)
- +5,000 TYQ5 110.5/111.5/112 1x3x2 call flys 4 over TYQ5 112/113/113.5 1x3x2 call flys
- +2,000 TYQ5 114.5 calls, 8
- -3,000 TYN5 110.75 calls, 16 vs 110-22.5/0.50%
- +3,000 TYN5 111.5 calls, 6
- +1,500 Wed wkly TY 110.75/111/111.25 call flys, 3.0
- +6,500 Wed wkly FV 107.5/107.75 put spds, 1 (exp today)
- +2,000 TYN5 110.5/111/111.5 call flys, 8
SWAPS: Natixis Recommend Short 2-/10-Year German/U.S. Bund Box Spread
Natixis recommend a German/U.S. 2/10-Year swap spread box compression trade, looking for a move to -15bp, with a stop set at 0bp.
- They believe that “geopolitical risk has been supporting the widening trend of the Bund swap spread, offering us a chance to fade the move”.
- They see “limited ripple effects from the conflict between Israel and Iran on the long end of swap spread curve. As the 10-Year swap spread gets closer to 0, reallocation flows from U.S. Treasuries to the Bund curve should slowly deter price sensitive investors”.
