FED: Warsh Downplays Inflation Vs Employment Tradeoff, Eyes Big Reforms (3/3)

• MNI: US TSY TICS NET FLOWS IN MAR +$150.7B
• US TSY TICS NET L-T FLOWS IN MAR +$81.3B

• RES 4: 1.3899 High Apr 8 
• RES 3: 1.3869 76.4% retracement of the Mar 31  - May 1 bear leg
• RES 2: 1.3808 61.8% retracement of the Mar 31  - May 1 bear leg
• RES 1: 1.3793 High Apr 14 
• PRICE: 1.3747 @ 16:30 BST May 18
• SUP 1: 1.3643 Low May 8 
• SUP 2: 1.3550 Low May 1 
• SUP 3: 1.3526 Low Mar 9
• SUP 4: 1.3482 Low Jan 30 and key support

A corrective cycle in USDCAD remains in play and last week’s climb reinforces this condition. The pair has traded through 1.3712, the 50-day EMA. This highlights a stronger S/T reversal and opens 1.3808, a Fibonacci retracement point. For bears, a reversal would mark the end of the correction and pave the way for a move towards 1.3550, the Mar 9 low and a key support. A clear break of this level would open 1.3482, the Jan 30 low.

SOFR & Treasury options trade outlined below. Better put volume on net, two-way with some selling earlier, larger 10Y vol flows late. Underlying futures were set up for a weaker close - whipsawed higher/pared move after Trump called off plans to bomb Iran tomorrow. Projected rate pricing look steady to mildly hawkish vs. late Friday lvls (*): Jun'26 at 0.0bp (-.8bp), Jul'26 at +1.9bp (+0.9bp), Sep'26 at +5.1bp (+4.0bp), Oct'26 at +8.9bp (+8.4bp), Dec'26 +15.5bp (+15.3bp).

• SOFR Options:
  • +6,000 SFRZ7 97.50/98.00 call spds, 4.0
  • -7,500 0QU6 96.62/96.75 3x2 put spds vs. SFRU6 96.62 puts, 10.0-10.5
  • +3,000 0QM6/2QM6 96.00 put spd, 7.0 net
  • -2,000 SFRM7 96.00 straddles, 79.5
  • appr -18,500 0QN6 95.56/95.75/95.81/96.00 put condors, 3.5
  • 5,000 SFRZ6 96.75/97.00 call spds ref 96.16
  • over 13,600 SFRM6 95.87/96.37 put spds ref 96.3375
  • Blocks, +8,000 SFRN6 96.00/96.06 put spds 0.75 ref 96.255
  • 1,000 SFRU6/SFRZ6 96.31/96.43 put spd spd
  • -1,500 0QZ6 96.50/97.00/97.25 broken call flys, 7.0 ref 96.055
  • -3,000 0QM6 96.25/96.50 put spds, 22 ref 96.005
  • -4,000 SFRM6 96.43 calls, 0.5 vs. 96.3325/0.10%
  • 2.200 0QM6 96.12/96.31/96.50 call flys ref 95.975 to -.965
• Treasury Options
  • 11,000 TYM6 109/109.5 strangle vs. wk1 TY 108.25/109.25 strangle
  • 4,000 TYU6 109/111/112.5 1x3x2 call flys, 8 net ref 108-29.5
  • -10,000 TYN6 108/110 strangles, 49 ref 108-29.5
  • 3,700 USN6 105/USM6 109 put calendar diagonal spd
  • +35,000 TYM6 110 calls, 5 ref 109-13, total volume over 51k
  • appr 21,000 FVQ6 104.75/105.75 put spds
  • -15,000 USN6 110 puts, 129 ref 110-09
  • 3,400 FVU6 105 puts, 21.5
  • 1,500 TYN6 114/115/116 call trees
  • over 5,000 TYN6 109/109.5 call spds vs. 107 put, 1-2 ref 108-28
  • Block, wk5 TY 109.5/110, 7 ref 108-27.5 (exp 05/29)
  • +2,500 TYM6 110 calls, 3 rvs. 109-08.5/0.05%
  • -6,500 Wed wkly TY 109 puts, 11 (exp 5/20)
  • +3,500 FVU6 105 puts, 21.5
  • +5,000 FVN6 107 puts, 51
  • over 7,000 USM6 110 puts, 17
  • -6,000 USN6 108/110/112 put flys, 25
  • -5,000 TYM6 110.5 puts, 130 ref 109-01.5
  • 1,800 TYM6 108 puts, 7
  • -4,000 wk1 TY 110 calls, 9
  • -2,000 TYN6 106.5/108.5 put spds, 34