EU HEALTHCARE: Novo Nordisk: WHO News

Carry-over SOFR & Treasury call option interest overnight, moderate volumes on a light data session. Underlying futures weaker, curves mildly steeper (2s10s +.996 at 49.364), pre-auction short sets ahead today's $42B 10Y auction. Projected rate cut pricing largely steady vs. late Tuesday (*) levels: Sep'25 at -22.6bp (-22.6bp), Oct'25 at -38.4bp (-38.4bp), Dec'25 at -58.3bp (-57.7bp), Jan'26 at -68.9bp (-68.9bp).

• SOFR Options:
  • Block, 5,000 SFRU5 95.87/95.93/96.00 call flys 1.5
  • -4,000 SFRU5 95.75/95.81/95.93/96.00 call condors, 2.5 ref 95.925
  • +4,000 SFRH6 98.00 calls, 2.5 ref 96.47
  • -10,000 0QZ5 96.50/96.75 2x1 put spds 1.5
  • +5,000 SFRU5 96.18/96.25 call spds .62
  • +8,000 SFRZ5 96.56/96.68/96.75 1x3x2 broken call flys, 0.5
  • +20,000 SFRZ5 99.00 calls, 0.25 ref 96.245
  • +6,000 SFRU5 95.81/95.87/96.00/96.06 call condors, 3.75 ref 95.925
  • +4,000 SFRU5 95.93/96.00 call spds ref 95.925
• Treasury Options:
  • -10,000 FVU5 109.25 calls, 13
  • +5,000 FVV5 108.25/108.75 2x1 put spds 6 vs. 109-01.75/0.17%
  • +1,500 FVU5 109/109.75 1x2 call spds 6 vs. 108-28.75/0.08%
  • 2,500 wk3 TY 112.75/113.25 call spds ref 112-02
  • 5,500 TYU5 110 puts, 2-3 ref 112-02.5
  • 27,000 Weekly Wednesday TY vs. wk2 TY 112 put spds, 7 net on the 3 day package where the first leg expires today. Or possibly a 3 day roll where open interest in the Wednesday option is 46,380 - in which case - more to trade soon.

Minneapolis Fed's Kashkari tells CNBC he's concerned about the trajectory of economic growth and says that his outlook for two rate cuts by year-end is still "reasonable" (he said in June that this implied a "possible first cut in September") though suggests that the Fed could reverse course if it turns out tariffs are too inflationary for comfort. Recall he is not a FOMC voter this year but is in 2026.

• "I would love to not have to do that [backtrack on cuts], but I'm realizing that these tariff effects are going to take a lot longer to really become clear. And if virtually all the other economic data is pointing to a cooling economy and a slowing economy, how long can we wait until the tariff effects become clear? That's just weighing on me right now. And so if the best of all the options is we make some adjustments, and then we have to pause, or even then we have to reverse course. That might be better than just sitting here on hold until we get clarity on tariffs."
• On the labor market: "if you want to look at supply and demand in any market, look at the price. The price of labor is wages, and wage growth is declining. It's been declining for some time. That tells me, yes, the labor market is cooling."
• On the BLS data: "I have had no reason to doubt the integrity of the BLS data...Ultimately, you cannot fake economic reality, even if, in the worst case scenario, imagine that numbers are being faked for anybody's political benefit. People are going to feel what they feel. Companies are either going to be hiring or they're not. And so Americans are going to feel the economy and so convincing them that inflation is not real is not a very effective strategy. Convincing somebody that the jobs number are better than they really are, I don't think it's actually going to work. So I don't even see the point of [manipulating the data]."
• On Gov Kugler's replacement: "There's... 19 of us at the table all making our best case about what's happening in the economy, and you have to persuade your colleagues. And if this person comes in and makes great arguments that we all find very persuasive, they can have a lot of influence."

SFIM6 96.75/97.50/98.25c fly, bought for 10.25 in 8k.