EU FINANCIALS: S&P Upgrades Caixa General(CXGD) & Banco Commercial Portugues(BCPPL)

Option desks report better Tsy option volumes overnight, leaning towards 5- & 10Y put structures with underlying futures trading at/near steady - narrow ranges on lighter volumes. Projected rate cuts through mid-2025 look steady to mildly lower vs. late Friday levels (*) as follows: Mar'25 at -1.9bp (-2.5bp), May'25 steady at -7.3bp, Jun'25 at -15.5bp (-15.8bp), Jul'25 at -20.1bp (-20.6bp).

• Treasury Options:
  • 6,000 TYK5 111/113 call spds ref 109-06.5
  • 2,000 TYK5 105/107 put spds vs. 111/113 call spds ref 109-05
  • -45,000 FVH5 106/107.5 put over risk reversals, 7.5 cr
  • 1,400 FVH5/FVJ5 105.5/106/106.5 put tree strip
  • Block: +10,000 TYH5 107.5 puts, 3.0 w/ +30,000 TYH5 108.5 puts, 13, 42 db for the strip vs. -30,000 TYJ5 107.5/108.5 put spds, 20, 18 net package
  • +10,000 TYH5 108.5 puts, 13 ref 109-07/0.29%
  • +7,000 TYH5 106/107 put spds, 1 ref 109-13/0.22%
  • +10,000 TYJ5 107.5/108.5 put spds, 19 ref 109-05.5 to -06/0.15%
  • 1,000 USH5 110/111 2x1 put spds ref 115-17
• SOFR Options:
  • 1,500 SFRM5 95.62/95.75/95.87 put flys ref 95.825
  • 5,000 2QH5 95.87/96.25 strangle or combo ref 96.05
  • 2,000 SFRK5 95.62/95.75/95.81/95.87 put condors ref 95.815 to -.82

• House Speaker Mike Johnson (R-LA) appears to be losing the race to dictate the GOP's legislative strategy, hinting the House may delay a Budget Committee mark up again and leaving the Senate to kickstart action on a two-bill reconciliation strategy.
• Johnson conveyed to Senate Republicans that he does not believe his chamber can pass two reconciliation bills this year, suggesting the extension of Trump’s tax cuts at risk if Congress gets behind the Senate’s two-bill strategy.
• Government funding expires in just over a month and appropriators are not close to a topline spending number.
• Senator Andy Kim (D-NJ) indicated Democrats may be willing to use a government shutdown as leverage to oppose Elon Musk’s federal government reforms.
• Chinese tariffs on roughly USD$14 billion worth of US exports are set to take effect today. Trump is expected to impose a 25% tariff on all steel and aluminium imports today. He has also teased further ‘reciprocal’ measures on trading partners this week.
• The Senate is expected to confirm Tulsi Gabbard as DNI and Robert F. Kennedy Jr. as HHS Secretary this week.
• OMB Director Russell Vought effectively halted the Consumer Financial Protection Bureau's operations.
• Trump’s special envoy to Ukraine rejected reporting that he would unveil a peace proposal at the Feb 14-16 Munich Security Conference.
• Poll of the Day: Americans say Trump is “doing what he'd promised during his campaign…”

Full article: US DAILY BRIEF

ERM5 97.9375/98.00/98.0625c fly vs 97.50p, bought the fly for flat in 10k.