US TSYS: Wrapping Up 2025
Dec-31 17:48
- Treasuries reversed early support after the final weekly claims data for 2025 came out lower than expected Wednesday, rather a decent range on moderate volumes ahead of the early close for the New Year's Eve holiday (1300ET; 1600ET Globex), re-open/electronic trade Thursday evening for Friday's order of business.
- TYH6 currently trades 112-17 (-3.5) vs. 112-14 low, curves mixed: 2s10s +.738 at 67.887, 5s30s -.890 at 111.961.
- The technical trend theme remains bearish and a break of 111-29 would confirm a resumption of the bear cycle. This would open 111-19, a Fibonacci projection. Key short-term resistance has been defined at 112-31, the Dec 18 high, where a break would undermine a bear theme and signal scope for a stronger recovery instead.
- Treasury yields slipped overnight in reaction to additional tariffs on beef by China: the US will have to pay 55% additional tariffs on beef exports to China, above its specified quota (164k tons a year in 2026). 10Y yield tapped a low of 4.1024% before climbing to 4.1513% high following the jobless claims data.
- Initial jobless claims for the Dec 27 week were much lower than expected at 199k, vs the 218k consensus (215k prior rev from 214k). This marked the lowest level of seasonally-adjusted initial claims since the Nov 29 week, though it is for that reason that we suggest caution: both are holiday weeks (the other is Thanksgiving) which typically translates into volatility in claims.
- Meanwhile continuing claims for the Dec 20 week came in at 1,866k (1,902k consensus, 1,913k prior rev from 1,923k), marking a 3-week low but still in the recent ranges. NSA claims dropped 103k to 1,881k, and like initial, we would expect a large pickup the following week.
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OPTIONS: Larger FX Option Pipeline
Dec-01 17:39
- EUR/USD: Dec04 $1.1550(E4.1bln), $1.1600(E1.5bln), $1.1650(E1.9bln), $1.1675(E1.2bln)
- USD/JPY: Dec04 Y153.00($1.2bln), Y155.50-70($1.6bln); Dec05 Y155.00($1.4bln)
- GBP/USD: Dec04 $1.3030-50(Gbp2.1bln)
- AUD/USD: Dec05 $0.6500(A$1.1bln)
- USD/CAD: Dec05 C$1.3990-15($1.3bln)
PIPELINE: Corporate Bond Update: Merck 8Pt Guidance Update
Dec-01 17:35
- Date $MM Issuer (Priced *, Launch #)
- 12/01 $Benchmark Merck** +3Y +57, +3Y SOFR+35, +5Y +50, 7Y +60, 10Y +70, +20Y +80, 30Y +85, 40Y +100
- 12/01 $1.3B Post Holdings 10.25NC5.25
- 12/01 $1.2B #Western Midstream $600M +5Y +113, $600M 10Y +148
- 12/01 $1B Hilton Domestic 8.25NC3 5.5%a
- 12/01 $950M #Burlington Northern SF 30Y +85
- 12/01 $Benchmark S&P Global +5Y +58, 10Y +75
- 12/01 $Benchmark GE Healthcare 3Y +60, 10Y +95
- 12/01 $Benchmark National Rural Utilities 2Y +45, 5Y +65
- 12/01 $Benchmark ANZ 3Y +37, 3Y SOFR+59, 5Y SOFR+68
- 12/01 $Benchmark Synovus Bank investor calls
- 12/01 $Benchmark Manulife investor calls
- **(Last time Merck issued debt was on September 2: $6B Merck $750M 2Y +25, $500M 2Y SOFR+46, $750M 5Y +45, $1B 7Y +58, $1.75B 10Y +68, $1.25B 30Y +75; after $4B on August 12: $750M 3Y +45, $1B +5Y +58, $1B +7Y +68, $1.25B +10Y +78)
SOFR OPTIONS: Bullish SOFR Positioning
Dec-01 17:26
Projected rate cut pricing rises vs. late Friday (*): Dec'25 at -25.7bp (-20.7bp), Jan'26 at -31.8bp (-28.4bp), Mar'26 at -38.7bp (-36.1bp), Apr'26 at -45.3bp (-43.4bp).
- +15,000 SFRM6 96.43/96.56/96.81/96.93 call condor w/ SFRU6 96.43/96.56/96.87/97.00 call condors, 7.5-7.75 total
- Update, appr -33,300 SFRF6 96.25/96.37 put spds .75-1.0 over 96.56/96.68 call spds ref 96.44 to -.43
- Block/screen, +17,000 SFRH6 96.37/96.50 call spds, 4.25 ref 96.425 to -.43
