CANADA DATA: Retail Sales Grow In March And April Despite Tariff Threats

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• Treasury Secretary Scott Bessent will deliver a keynote address at the Institute of International Finance to share his “thoughts on the state of the global financial system” at 10:00 ET 15:00 BST. Bessent yesterday led a major tone shift from the administration. His private comments at an investor event foreshadowed a dovish pivot from President Donald Trump on China and Fed Chair Jerome Powell.
• The White House is reportedly closing in on general agreements with Japan and India that fall short of comprehensive trade deals but could be touted as progress toward realising Trump's agenda.
• Trump suggested yesterday that a trade deal with China could be on the horizon. He also hinted that Beijing has more to gain than Washington from a deal, indicating that a standoff over initiating high-level talks continues.
• On China’s tariff rate, Trump said: “145 percent is very high, and it won't be that high… It'll come down substantially, but it won't be zero.”
• Ukraine peace talks in London get underway today without Secretary of State Marco Rubio or negotiator Steven Witkoff. The prospect of a breakthrough today appears remote after Ukrainian President Volodymyr Zelenskyy rejected a central pillar of the US ceasefire proposal.
• Iran's Foreign Minister said indirect nuclear talks with the US are on the “right track”.
• Poll of the Day: Large majorities of US adults support courts and Congress checking presidential power.

Full Article: US DAILY BRIEF

SOFR & Treasury options saw rise in volumes overnight, better Treasury calls on net, SOFR mixed but leaning towards calls as well with underlying futures trading mostly higher. Improved sentiment lifting rates and stocks as Pres Trump softens stance on sacking Fed Chair Powell and reducing China tariffs. Short end weaker, however, as curves continue scaling back from Monday's broad based steepening (2s10s currently -9.322 at 48.643). Projected rate hike pricing has cooled vs. late Tuesday levels (*) as follows: May'25 steady at -2.7bp, Jun'25 steady at -17.7bp, Jul'25 at -36.9bp (-38.6bp), Sep'25 -55.2bp (-57.6bp).

• SOFR Options:
  • 10,000 SFRU5 95.75/95.87/96.00 put trees, 0.5 ref 96.24
  • Blocks, 12,000 0QM5 96.87/97.25 call spds, 10.5 ref 96.76
  • 5,000 SFRM5 95.62 puts & 5,900 USM5 95.75 puts
  • 3,000 SFRZ5 95.37/95.62 put spds ref 96.495
  • 3,000 SFRM5 96.18 calls, 5.0 ref 95.88
  • 3,300 SFRZ5 95.37/95.81 put spds ref 96.49
  • Blocks, 6,700 SFRU5 95.25/95.75 put spds, 3.75
  • 2,000 SFRK5 95.68/95.75 2x1 put spds ref 95.88
  • 2,000 SFRM5 96.25/96.37 call spds ref 95.855
  • 2,000 SFRK5 96.12/96.25 call spds vs. 95.75 puts ref 95.90
• Treasury Options:
  • over 19,900 TYK5 111.5 calls
  • over 14,400 TYM5 112 calls, 36 last
  • over 10,500 TYM5 115.5 calls, 4 last
  • over 3,600 USM5 117 calls, 108 last ref 115-10
  • 1,600 TYK5 111/111.5 strangles ref 111-04
  • 1,500 FVN5 107/108 put spds ref 108-09.75
  • Block, 10,000 TYM5 112/115.5 call spds, 30 vs 111-01/0.28%
  • 1,500 FVM5 109/110/110.5 broken call flys ref 108-06.5
  • 1,500 TYK5 110.5/111.75 call spds ref 110-31.5
  • 9,000 USM5 118/120 call spds, 18 ref 114-14
  • 3,600 TYK5 111.5 calls, 6 ref 110-28.5

Our commodities team notes that crude oil trades to fresh session lows after Kazakhstan’s Energy Minister told RTRS that national interests take priority over OPEC+ when it comes to oil output levels.

• This could be providing some marginal background support for core global FI markets.