OPTIONS: UK Rate Selloff Meets With Upside Plays

Monday's Europe rates/bond options flow included:

• Bond Futures Package:
  • DUU5 107.30p, sold at 21.5 in 6.75k
  • DUU5 107.20p, sold at 17.5 in 6.75k.
  • UBU5 119.00p, sold at 280 in 500.
    vs
  • RXU5 130.00p, bought for 115 in 2k.
  • OEU5 117.75p, bought for 64.5 in 4k.
• ERM5 97.87p, bought for 0.25 in 6k.
• SFIU5 96.00/95.90/95.60p ladder, bought for 3.5 in 4k.
• SFIZ5 96.25/96.35/96.45/96.55c condor, bought for 2 in 5k.
• SFIZ5 95.90/95.80/95.70/95.60p condor, bought for 1.75 in 8.88k.
  
  
  
   

• The Russian delegation in Istanbul on Monday handed over to Ukraine its "memorandum" on a ceasefire, and the Ukrainian team will have a week to study it, Defense Minister Rustem Umerov said. Details of the memorandum are now hitting the major newswires:
  • "First part of Russian memorandum envisages lifting of all existing and rejection of new economic sanctions and restrictive measures between Russia and Ukraine - IFX"
  • “Memorandum suggests confirmation of Ukraine’s status as a non-nuclear-weapon state, with explicit ban on deployment of nuclear weapons on its territory” (Reuters)
  • "Memorandum assumes Ukraine’s neutrality: IFX"
    "Memorandum demands Ukraine to leave 4 regions: Tass"
  • "Russia sees Ukraine elections before final agreement: IFX" (BBG)

• Alongside the Norwegian Krone, the New Zealand dollar is the best performing currency in G10 Monday, led higher by the broad pessimistic sentiment for the dollar and the relatively stable reaction in equity markets to geopolitical and tariff developments over the weekend.
• The 1.15% rise during today’s session has prompted NZDUSD to return to an important zone of resistance between 0.6025/40. A close at current levels would be the highest since the US election, signalling scope for a more protracted recovery towards 0.6168, the 76.4% retracement of the Sep ’24 – Apr ’25 selloff. AUDNZD has registered a one-month low at 1.0758, and further NZD outperformance will place attention on the year’s lows at 1.0652.
• The hawkish slant from the RBNZ last week has only seen a slight paring back of short positions. As a reminder, while the bank cut rates by 25bps to 3.25% as expected, the board suggested that the base rate is near the 'neutral' zone, which may limit the space for further rate cuts ahead. CFTC Data showed asset managers maintaining their shorts, while the leveraged community pared back only a small portion of the decent short they had initiated the week before.
• NZ terms of trade data will cross during Tuesday’s APAC session, however, the economic calendar remains light for the rest of the week. This will likely leave Kiwi susceptible to the broader risk tone and associated greenback trajectory.