US TSYS: Near Late Session Lows, Unit Labor Costs Rises, US/UK Trade Deal
May-08 19:32
- Treasuries look to finish near late Thursday session lows (TYM5 110-26, -23.5 vs. 110-22.5 low), initially triggered by higher than expected rise in Unit Labor Costs and a $25B 30Y bond auction that tailed.
- While Pres Trump's annc of a "breakthrough" US/UK trade deal did little to forestall the steady decline in rates, Pres Trump's suggestion: "better go out and buy stocks now" did help to buoy equity markets through midday.
- Commerce Sec Lutnick said UK would purchase $10B worth of Boeing planes at Pres Trump's UK trade annc, this will apparently be International Consolidated Airlines Group (IAG).
- The BoE lowered the policy rate to 4.25%, but the committee splintered with a three-way vote on the decision.
- Cross asset roundup: Bbg US$ index finished near May 2 highs (BBDXY +8.23 at 1230.92), Gold weaker at 3292.25 (-72.21), Crude firmer (WTI +1.87 at 59.94), while stocks have scaled off second half highs, SPX eminis currently +73.00 at 5725.0.
- Friday look ahead: Data supplanted by return of Fed speakers from media blackout: Barr, Kugler, Williams, Barkin, Waller, Hammack and Cook expected.
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US OUTLOOK/OPINION: Cleveland Fed Core CPI Tracker Points To 0.26% M/M
Apr-08 19:31
- The Cleveland Fed nowcast has headline CPI at 0.01% M/M whilst its core tracker has CPI at 0.26% M/M after six consecutive months at 0.27% M/M.
- The core tracker has had some weaker months recently, overshooting by 0.04pp in Feb, a large undershoot of 0.18pp in Jan (arguably hindered by new seasonal factors and weights) and an overshoot of 0.06pps in Dec.
AUDUSD TECHS: Bearish Outlook
Apr-08 19:30
- RES 4: 0.6409 High Dec 9 and a key resistance
- RES 3: 0.6389 High Apr 3
- RES 2: 0.6283 50-day EMA
- RES 1: 0.6127/0.6219 High Apr 7 / Low Mar 31
- PRICE: 0.6018 @ 16:32 BST Apr 8
- SUP 1: 0.5931 1.764 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 2: 0.5900 Round number support
- SUP 3: 0.5830 2.000 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.5729 2.236 proj of the Sep 30 - Nov 6 - 7 price swing
The latest steep sell-off in AUDUSD cancels a recent bullish theme and instead, confirms a resumption of the downtrend that started late September last year. Monday’s fresh cycle low reinforces a bear theme. A key support at 0.6088, the Feb 3 low, has been broken. This paves the way for an extension towards 0.5931 next, a Fibonacci projection. On the upside, resistance to watch is at 0.6219, the Mar 31 low.
US TSYS: late SOFR/Treasury Option Roundup: Curves Surge Steeper
Apr-08 19:22
Mixed SOFR & Treasury option flow remained mixed, accounts finding it hard to find momentum as tariff headlines continued to drive volatile underlying futures moves, curves twisting to new highs (2s10s tapped 55.157 high). Projected rate cuts through mid-2025 have rebounded vs. morning's levels - back to pricing in a full point by year end. Current levels vs. early morning (*) as follows: May'25 at -14bp (-8.2bp), Jun'25 at -38.2bp (-28.3bp), Jul'25 at -61.6bp (-49.1bp), Sep'25 -79.3bp (-65.7bp).
- SOFR Options:
- -10,000 0QN5 97.25/97.50/97.75 call flys vs 0QZ5 97.25/97.50 call spds, 2.25-2.0
- +10,000 0QM5 97.00/97.50 call spds 9-9.5 ref 96.745
- Block/screen/pit, 50,000 SFRM5 95.75 puts, 2.75 vs. 96.00/0.12%
- -5,000 2QK5 96.31 puts, 5.0 vs. 96.675/0.20%
- -3,000 0QZ5 96.75 straddles, 83.5-83.0 ref 96.765
- -10,000 SFRZ5 98.00/98.50/99.00 call flys, 1.0 ref 96.545
- 5,000 SFRU5/0QU5 96.37 put spds
- Block/screen, -50,000 SFRM5 96.50/97.25 call spds 5.0-4.5 ref 96.015
- 4,550 SFRU5 95.75 puts, 2.75 ref 96.355
- 1,250 SFRM5 95.68/95.75/95.81 put trees ref 96.025
- Block, 1,125 SFRU6 96.00/0QU5 96.62 3x2 put spd, 20.0 net/front Sep over
- 1,000 SFRK5 95.75/95.87/96.00 2x3x1 put flys
- 2,000 SFRM5 95.81/95.87/95.93 put flys ref 96.025
- 3,000 SFRM5 96.00/96.12 call spds ref 96.038
- 2,000 SFRU5 95.25/95.62/95.75/95.81 broken put condors ref 96.39 to -.37
- 2,000 SFRM5 96.50/97.00 1x2 call spds
- Block/screen, 9,500 SFRU5 95.62/95.81 put spds ref 96.40
- 1,000 SFRM5 95.81/95.87/95.93 put flys ref 96.055
- 10,000 SFRN5 97.00/98.00 call spds vs. 0QN5 97.50/98.00 call spd spd
- Treasury Options:
- 16,250 TYK5 113/114 call spds 10 ref 111-19
- 5,000 TYM5 113.5/114.5 call spds, 14 ref 111-22.5
- 1,750 FVK5 108.75/110 1x3 call spds, 3.5
- 1,500 TUK5 103/103.5 3x2 put spds, 7 net ref 103-24.25 to -23.88
- 1,500 TYK5 104 calls, 9.5 ref 103-26.12
- 3,600 TUK5 104.12 calls, 8 ref 103-26.38
- 2,500 TYM5 112/113/114/115 call condors
- 6,700 USM5 112/114 put spds, 31 ref 116-23
- 4,800 TYM5 113 calls, 46 ref 111-21.5
- 3,000 TYK5 110/110.5 put spds ref 110-22
- 6,300 TYK5 110 puts, 14 ref 111-21
- 8,500 TYK5 113.5/115 call spds ref 112-05.5
- 1,500 TYK5 112.5/114 1x2 call spds ref 112-02
- 1,200 FVM5 107/107.5 put spds
- 3,000 TYK 111.25 puts, 32 ref 112-01
- Block, 4,000 TYK5 112.25 puts 61 vs. 112-03/0.52%
- over 5,700 TYM5 114.5 calls, 33 last
- over 5,100 TYM5 108.5 puts, 13 last
- 2,000 TYM5 113.5/115.5 call spds ref 111-31
