EQUITIES: Option Expiry Friday (Updated)

UK paper has mostly looked to cues from Tsys over the past couple of hours.

• A downtick in global equity index benchmarks may also be providing some background support in recent trade.
• Futures last 91.32 after a recovery from lows of 91.22, ultimately sticking within the range established over the past couple of sessions. A bullish cycle remains in play. Initial resistance at 91.82. Initial support at 90.65.
• Yields 1.5-2.5bp higher, 5- to 10-Year zone under the most pressure.
• SONIA futures little changed to -3.0, SFIZ5 & Z6 have failed to retest lows seen in recent weeks/months.
• BoE-dated OIS continues to consolidate at hawkish cycle extremes, showing ~8bp of easing through year-end, with the next 25bp cut not fully discounted until the April ’26 meeting.
• CPI data headlines the local calendar tomorrow; our full preview of the release is available here.

ERM6 98.3125c, bought for 4 in 10k total.

Industrial production and capacity utilization data pointed to a continuation of a tepid trend in August, with activity moderating since a push higher at the turn of the year. 

• Industrial production was stronger than expected in August at 0.1% M/M (cons -0.1) but with a net downward revision of -0.16pps offsetting most of this positive surprise. The revision was concentrated in July with -0.4% M/M vs the originally reported -0.1%.
• Manufacturing production was on balance stronger than expected however, with a clear beat in August at 0.2% M/M (cons -0.2) after a net downward revision of -0.15pps also mainly in July.
• Utilities continue to play a volatile role, slipping -2.0% M/M in Aug for the heaviest decline since March after a net upward revision of 0.28pps.
• In trend terms, IP growth eased back four tenths to 0.9% Y/Y although sees slightly stronger recent momentum with 1.5% annualized on a 3m/3m basis. Manufacturing production also eased four tenths to 0.9% Y/Y with the same 0.9% annualized run rate.
• Capacity utilization meanwhile is pointing to a clearer recent moderation, at 77.4% for a second month running after a downward revision to its lowest since January. It peaked this year at 77.9% in Feb and was still at 77.8% in June.