US-RUSSIA: We Do Not Reject Peaceful Settlement To UKR Crisis - Putin
Reuters reporting comments from Russian President Vladimir Putin, speaking at an event with Russian security officials. Putin says that “first contacts” with the Trump administration “inspire hope” that Moscow and Washington are “ready to set up cooperation”.
- Putin says Russia does “not reject peaceful solution to Ukraine crisis” but stresses that it is important that those involved in talks show "pragmatism" and “reject stereotypes of their predecessors.”
- Putin claims, “We understand that some Western elites will try to undermine our dialogue with US.” Adds: “Additional measures should be introduced to defend Russia’s state border.”
- Putin’s comments come amid a delicate stage of negotiations towards a ceasefire agreement. The Kremlin likely believes that Trump’s conciliatory tone towards Moscow can lead to a ceasefire agreement that blocks Ukraine’s pathway to NATO membership, formalises Russian sovereignty over occupied territories, and limits the presence of NATO/EU peacekeeping troops in Ukraine - An exceptionally difficult settlement for Kyiv to accept, despite political will for a resolution.
- Focus of Trump's meeting with UK Prime Minister Keir Starmer today and Ukrainian President Volodymyr Zelenskyy tomorrow will be any security assurances that can entice Kyiv to the negotiating table, including language in mineral sharing agreement.
- Russian Foreign Minister Sergei Lavrov reiterated in Qatar yesterday that Russia will oppose European peacekeepers in Ukraine, appearing to rule out one possible security assurance: "This approach, which is being imposed by the Europeans, primarily France, but also the British, is aimed at what I just mentioned: to further fuel the conflict..."
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US TSYS: Early SOFR/Treasury Option Roundup
Mixed SOFR & Treasury option trade reported overnight on much lighter volumes than the week opener. SOFR leaning towards upside call structures and puts in Treasury options. Underlying futures continue toi gradually unwind Monday's DeepSeek inspire risk-off support. In turn, projected rate cuts through mid-2025 have eased vs. late Monday (*) levels as follows: Jan'25 at -0.1bp (-0.7bp), Mar'25 at -7.8bp (-8.3bp), May'25 at -14.7bp (-15.9bp), Jun'25 at -26.7bp (-27.9bp), Jul'25 at -31.6bp (-33.7bp).
- SOFR Options:
- Block/screen, 3,500 SFRZ5 95.62/96.12 2x1 put spds, 10.0ref 96.10
- 2,000 SFRJ5 96.00/96.06/96.12 call flys ref 95.935
- 1,000 0QM5/0QZ5 96.25/96.50/96.75 call fly spd
- 3,900 SFRH5 95.87/96.00 call spds ref 95.78
- Treasury Options:
- 5,000 TYH5 106/107 put spds, 5 ref 108-29
- 3,000 wk1 TY 107.75/108 put spds (exp 2/7) ref 108-29 to -27.5
- 1,250 TYH5 103/104.5/107 broken put flys ref 108-31
SPAIN: Cabinet To Approve Pensions & Tax Decree After Gov't & Junts Reach Deal
The Council of Ministers is set to approve an omnibus decree later today after the gov't parties reached an agreement with the pro-Catalan independents Junts party. The decree is set to include a boost to state pensions in line with inflation and the restoration of public transport subsidies, among other measures. Last week Junts, which supports the gov't of PM Pedro Sanchez in a confidence-and-supply agreement, voted with the opposition conservative Popular Party (PP) to defeat the omnibus decree, citing a lack of trust in the Sanchez gov't.
- After the Council approves the decree, Sanchez is expected to deliver public remarks explaining the changes made to the decree that enabled Junts to offer its support.
- While the agreement limits stability risks in the short term, over the medium-to-long term Spain's policy-making environment remains vulnerable to the whims of regionalist and separatist parties given the lack of a majority for Sanchez's leftist coalition gov't.
CROSS ASSET: USD Demand In Early NY Trade As E-Minis Fade From Highs
E-mini weakness over the last 90 minutes seems to have factored into fresh USD demand, with little of note when it comes to macro headline flow.
- BBDXY back towards London morning highs, with the likes of EUR/USD and cable registering fresh session lows, albeit remaining comfortably within ranges seen over the past few sessions.
- Initial negative reaction to GM earnings pre-market, although the name is only indicated -0.5%.
- The move lower in equities also means that TY, Bund and gilt bears have not been able to force a retest of session lows.
