EU UTILITIES: Week in Review

Russian state media is carrying comments from Foreign Minister Sergey Lavrov, who is speaking in Moscow after a meeting with his Jordanian counterpart Ayman al-Safadi. Regarding the war in Ukraine, Lavrov claims that Russia "is ready to work on Ukraine in any format, with the understanding that the work will be honest." Reuters reports Lavrov saying Russia is "ready to discuss the political aspects of the settlement with Ukraine".

• While Lavrov's comments may indicate an intention to begin talks, there has been no apparent movement on Putin-Zelenskyy talks, which have been pushed by US President Donald Trump. It remains to be seen whether Trump will look to turn up the pressure on Moscow if it is seen as dragging its heels on a potential bilat.
• Lavrov claims that Russia is "in favour of a security guarantee for Ukraine being reliable." Says the Istanbul Agreement of 2022 is a good example. This was a draft deal that, as the Institute for the Study of War noted "surrenders Ukraine's sovereignty and prohibits any efforts by Ukraine or any other state to maintain Ukrainian armed forces adequate to deter or defend against, a future Russian attack."
• Lavrov: "Questions of security cannot be resolved without Russia...We hope Washington understands that discussing security issues without Russia is a path to nowhere"
• Lavrov: "We didnt hear any constructive ideas from Europeans at their meetings with Trump...We only see the EU's clumsy attempts to change Trump's position on Ukraine and aggressively escalate the situation."

• Over 87,900 TYV5 113 calls, 20-23 ref 111-24.5 to -25.5
• 50k traded at 19 yesterday, total volume over 78k, saw open interest rise by 48,990 to 158,754.

• MBA composite mortgage applications edged -1.4% (sa) lower last week to hold onto most of its refi-driven 11% increase the week prior.
• Indeed, new purchase applications increased 0.1% after 1.4% whilst refis dipped -3.1% after 23.0%.
• Levels relative to 2019 averages: composite 59%, new purchases 62% and refis 53%.
• The 30Y conforming rate was near unchanged on the week at 6.68% (+1bp) after the 6.67% the week prior was the lowest since early April.
• Coupled with a 5bp rise in the average 10Y swap rate over the week and the 30Y mortgage to 10Y swap spread fell below its range of 300bp +/-5bp seen mostly since reciprocal tariff announcements in April vs 285bps averaged in Q1. That is however just one week and it's only a relatively small decline.
• Jumbo loan rates meanwhile have reverted to trading inside regular rates again after a 6bp decline to 6.64%. The regular to jumbo spread of 4bp compares with -3bp the week prior and 12bp the week before that at what was its highest since Oct 2023.