EURIBOR OPTIONS: Put fly buyer

Major EGB futures have continued to grind higher through the course of the session, with BTPs narrowing the gap to resistance at 119.07 (April 4 high). 

• Currently +88 ticks today at 118.98, clearance of the April 4 high would be a bullish reversal development and expose 119.31, the March 4 low. This would mark a full reversal of the sell-off seen following German Chancellor Merz’s landmark fiscal announcement.
• Friday’s ratings upgrade from S&P (covered in more detail earlier) continues to drive BTP outperformance against EGB peers, with the 10-year BTP/Bund spread now 5.5bps tighter on the session at 118.5bps.
• OAT futures are +57 ticks at 124.50, with the April 7 high at 124.87 presenting initial resistance. The 20-day EMA at 123.24 provides support.
• Yesterday, French finance minister Lombard noted that the Government needs to find E40bln of savings to reach its 2026 deficit target of 4.6% GDP. He also expressed a preference for the government’s high-earner tax to become permanent.
• Although French political risks have taken a backseat since PM Bayrou was able to pass his 2025 budget, the administration remains in a precarious position. The need for further fiscal consolidation in France, alongside fallout from RN Leader Le Pen’s legal troubles, may place stress upon the fragile agreements Bayrou has formed to remain PM. 

SFIK5 95.95/96.10cs, bought for 3.75 in 4k.

• MNI: CANADA FEB WHOLESALE SALES -2.7%; EX-AUTOS +1.0%
• FEB WHOLESALE INVENTORIES +1.6%: STATISTICS CANADA
• CANADA FEB WHOLESALES EX-PETROLEUM/OILSEED/GRAIN +0.3%