EUROPEAN FISCAL: More on the Italy/EU energy bill story via BBG:

• Despite a bounce to 153.70 ahead of the NY crossover, USDJPY has been creeping lower since and finds itself just 30 pips above the overnight low at typing. The relatively benign price action might lead some to believe that downside momentum could dwindle ahead of US inflation data across Thu/Fri, however, with any rallies continuing to be sold, further aggressive moves lower should not be ruled out.
• Daily lows of 152.95 and 152.89 show a very obvious area that could see selling momentum pick up, with support then scant until the year’s worst level of 152.10. Furthermore, there are two additional support levels down there which could easily come into play ahead of the US figures; 151.94, the 50.0% retracement of the Apr 22 ‘25 - Jul 23 ‘26 bull cycle, and 151.63, the 1.00 projection of the Jul 23 - Aug 3 - Sep 2 price swing.
• The fundamental shift for the yen has been well covered in recent sessions, however, Bessent’s goading overnight remarks just adds to the ‘catching the falling knife’ narrative at present, and could bolster bearish USDJPY momentum should the buyback announcement surprise at all.
• JP Morgan stated they are fairly committed to the bullish JPY view but want to be able to sell an uptick to 158-160 should it be seen again. The durability of the BOJ hiking and the potential domestic rebalancing of Japanese pension funds is an important theme for JPY, but they are cognizant that it may take several months to develop.

Today's preliminary announcement for Thursday's 10-20Y Treasury liquidity support buyback is expected at 11am, listed on Treasury Direct here

• It's the most anticipated buyback announcement in memory following the Treasury's August 19 announcement that new upsized operations will shift from buying a maximum $2B / operation,  to buying "at least" $4B / operation. (A side note: the previous buyback announcements have not included a minimum total size so this would be something new, and isn't currently an option on the HTML table but could be added to the PDF).
• At this point $4B minimum seems to be very much a floor; given the hype, $6B or higher may be required to avoid an averse market reaction at the long end. It should be achievable with total par amounts offered routinely running into the $15-20B area per 10-20Y operation though the last operation saw only $7.4B in offers. We discussed the Treasury's signaling of a more activist approach in our latest UST Deep Dive here.
• It's unclear whether there will be a revised schedule for the quarter released alongside, vs the August 2026 Quarterly Refunding version out on Aug 5 that had pencilled in a max $2B per 10-20Y and 20-30Y operation. But we'd guess that Treasury wants to maintain some flexibility in how much is repurchased in each operation so will not provide expected totals as yet. The next longer-term operation , for 20-30Ys, is scheduled for September 24th (announcement Sept 23rd).

• +22,000 TYV6 107 calls, 38 vs. 107-09/0.68% at 0950:49ET
• not long after 16,059 TYV 107 puts trade on screen: 19