TECHNOLOGY: MNI Q125 TMT Earnings Tracker

• The OBR notes that UK trade as a share of GDP is around 64%, above the G20 average of 55 per cent% - illustrating that the UK economy is relatively open.
• The OBR further notes: "the composition of [UK] trade with the US is skewed toward services rather than goods. The US accounted for 15 per cent of the UK’s goods exports and 10 per cent of its goods imports in 2023. In the services sector, the US has a larger role, representing 27 per cent of the UK’s exports and 19 per cent of its imports."
• The OBR's analyses all concentrate on trade in goods, not in services.
• The OBR has run some scenario analysis on the potential impacts of US tariffs on headroom. In scenario 1, the US implements 20ppt additional tariffs on Canada, Mexico and China with reciprocal tariffs. In scenario 2, the US levies these tariffs on the rest of the world – but there is no retaliation. In scenario 3, the rest of the world retaliates.
  • In scenario 1: UK GDP is 0.2ppt lower than the OBR's central forecast in FY26-27 but then unchanged going forward as "after the initial disruption, this is broadly offset by trade diversion, where demand for UK goods rises as they are relatively cheaper."
  • In scenario 2: Demand for UK goods exports to the UK falls 8% (based on -0.4 price elasticity). Inflation would then be 0.3ppt higher in FY25-26, but below the 2% target in FY27-28 and FY28-29 before returning to target. There would be a "moderate depreciation in sterling, mitigating some of this effect." GDP would then be 0.6ppt lower in FY26-27 with a permanently lower 0.3ppt decrease.
  • In scenario 3: UK inflation rises 0.6ppt above the central forecast in FY25-26. "The peak impact on GDP is around 1 per cent in 2026-27. As GDP growth weakens, there are limited second-round effects on inflation, which then falls to 1.8 per cent in 2027-28... medium-term UK GDP is around ¾ per cent lower than in our central forecast"
• Both fiscal rules (current budget in surplus by 2029-30 and PSNFL falling by 2029-30) are met under all three scenarios (despite the hits to GDP), albeit only just in Scenarios 2/3. The OBR notes that scenario 2 and 3 have similar outcomes for the current budget deficit – this is due to the higher UK tariff revenue in scenario 3 offsetting the larger hit to GDP.

• Secured Overnight Financing Rate (SOFR): 4.41% (+0.07), volume: $2.636T
• Broad General Collateral Rate (BGCR): 4.36% (+0.03), volume: $945B
• Tri-Party General Collateral Rate (TCR): 4.36% (+0.03), volume: $898B
• (rate, volume levels reflect prior session)

Better Treasury call option trade reported overnight, SOFR options look a little more mixed ahead the NY open. April kicks off with underlying futures unwinding yesterday's month/quarter end selling (TYM5 taps 111-27.5, highest since Mar 4). Added support on WaPo report White House aides drafting tariff proposal of appr 20% ahead tomorrow's "Liberation Day" annc (1500ET). Projected rate cuts through mid-2025 rebound from late Monday levels (*) as follows: May'25 at -4.7bp, Jun'25 at -22.3bp (-20.1bp), Jul'25 at -38.6bp (-35.1bp), Sep'25 -56.1bp (-51.4bp).

• Treasury Options:
  • 5,200 USM5 119 calls vs. wk1 US 119.5/121 call spds ref 118-18
  • 1,000 USK5 120/123/126 call flys ref 118-16
  • 8,000 TYK5 112/112.5/113/113.5 call condors ref 111-24.5
  • 7,000 Wed wkly TY 111.5/wk1 TY 111.75 call spds
  • over 10,200 TYK5 113 calls, 21 last
  • 10,000 TYM5 113.5/115.5 call spds ref 111-24
  • over 6,700 each: TYK5 111.5 and 112 calls
  • over 6,200 TYK5 114 calls 8 last ref 111-22
  • 2,000 FVK5 108.75/109 call spds ref 108-11.25
  • 8,000 TYK5 113.5/115 call spds ref 111-17.5
• SOFR Options:
  • 4,000 SFRQ5 95.50/95.68/95.87 put flys ref 96.225
  • 2,100 SFRM5 95.37/95.62 put spds vs. 96.37/96.62 call spds
  • 3,200 SFRM5 95.75/95.87/95.93 put trees
  • 3,000 SFRU5 96.25/96.50 call spds
  • 1,500 SFRU5 95.25/95.50/95.75/96.00 put condors ref 96.22
  • 10,000 SFRM5 96.06/96.18 call spds vs. 2QM5 96.75/96.87 call spds
  • 2,000 SFRM5 95.62/95.68 put spds ref 95.925
  • Block/screen, 6,000 SFRM5 96.12/96.50 call spds, 3.5 ref 95.915
  • 2,000 0QM5 97.00 calls vs. 2,500 97.50 calls ref 96.595
  • 1,500 2QJ5 96.75 calls ref 96.58