ICE EUA FUTURES TECHS: (Z5) Bull Cycle Extension

• Reoffer yield/price: 2.623%/ 99.893
• Coupon: 2.6% Annual ACT/ACT, short first to 22-October-2025
• Spot ref: 38.4bps vs OBL 2.4 30 #191 @ 100.73/2.239% (HR 107%)
• EU7b 5Y Fixed (Oct. 22, 2030) at MS+28 (guidance was MS+30 Area)
  • MNI had expected a E7bln size.
• Books above EU72b (including JLM interest): Leads
• Settlement: May 21, 2025
• ISIN: BE0000365743
• Bookrunners: BNPP, Barclays (B&D), Citi, Natixis, SocGen
• Timing: Priced, TOE 14.21 CET/ FTT immediately

Details as per market source

The House Ways and Means Committee has approved the Republican tax bill in a 26-19 vote, along party lines, following a 17-hour markup. The other two crucial committee markups - Agriculture and Energy and Commerce - are set to resume today with safety net programmes - Medicaid (E&C) and SNAP (Ag.) - the focus of debate.

• Punchbowl reports that the final Ways and Means markup failed to resolve the dispute between blue-state Republicans and GOP leadership over the cap on State and Local Tax deductions (SALT).
• House Speaker Mike Johnson (R-LA) is aiming to assemble the final ('One Big Beautiful Bill') package in the House Budget Committee on Friday before holding a full vote on the House floor next week. Johnson can likely only lose three Republican votes in a House ballot, meaning that SALT Republicans can torpedo the bill if they haven't received sufficient assurances from GOP leadership. Likewise, conservatives could rebel if they see the package falling short on spending cuts. So far, Johnson has outperformed expectations on the floor, so the baseline scenario is that he will successfully force the bill through.
• Senate Finance Committee Chair Mike Crapo (R-ID) indicated to reporters yesterday the Senate will revise the package they receive from the House: “We are, both the House and the Senate, trying to stay as close as we can on policies. That being said, the House is going to have a different work product than we end up with here.”

• Tuesday saw the highest FX derivative volumes on the DTCC since April 22nd, with near $140bln cumulative notional clocked, despite generally quieter EUR and JPY hedging activity.
• Instead, better BRL, GBP, KRW and HKD trade underpinned activity - as the fade off highs for the dollar helped stimulate demand for USD/BRL puts and GBP/USD calls, however markets favoured hedging against further weakness in APAC currencies - evident in the demand for HKD and KRW downside. This stands in contrast with the front-end of the USD/HKD risk reversals curve: 1m was pressed to -1.5 points for the first time in decades as spot tested the strong-side of the HKMA band last week.
• This keeps the front-end of the USD curve under pressure - the MNI-weighted USD 1m Risk Reversal remains 0.5 points in favour of puts over calls, off lows - but in range of the multi-year lows just before Trump's 90-day tariff delay. This contrasts with the rebound in the USD Index, which remains near 3% off pullback lows - but is yet to top the 50-dma.

Figure 1: Synthetic USD Index Risk Reversal still heavily subdued, despite US-China prelim deal