OIL: Russian Urals Discount Rises to Largest SInce Early 2022

Natixis recommend initiating 3s30s swap spread curve flatteners.

• They note that H225 has seen “a large move wider across the curve for various reasons, including but not limited to deregulation, a potential change in the Fed’s target rate, a quicker end to QT, significant rate locking flows and potential for future Fed TOMO operations during periods of repo tightness”
• While they think “many of the themes that have pushed spreads here are either priced in or overly priced” they suggest that “there is nothing near term that will disprove any of those themes.”.
• That said, Natixis write “while we think front end spreads can remain bid, our overall curve views on cash bonds has us bearish longer term spreads, and heading into 2026 would prefer to express this via a swap spread flattener”. 

RXZ5 129.00c, sold at 20 in 2k.

• Over -30,000 SFRZ5 96.18/96.25/96.31/96.37 call condors sold from 1.5-1.75 (ref 96.19) between the pit and block screen. Massive open interest in the four strikes between 340k to 604k.
• Potential roll-up of options that expire two days after the final FOMC meeting of 2025 on December 10.
• Projected rate cut pricing gaining vs late Monday levels (*): Dec'25 at -12.3bp (-10.2bp), Jan'26 at -23.1bp (-20.1bp), Mar'26 at -34.1bp (-30.9bp), Apr'26 at -41.4bp (-37.6bp).