OPTIONS: Busy For Bobls Wednesday

WI holding steady at 4.321% ahead of the $58B 3Y note auction (91282CMF5) cut-off at 1300ET, compares to last month's 4.117% high yield vs. 4.115% WI.

• US TSY 3Y AUCTION: NON-COMP BIDS $250 MLN FROM $58.000 BLN TOTAL

• Eurozone rates have been clear underperformers today, with 3mth Euribor futures currently up to 4 ticks lower in mid-2026 contracts vs much more modest changes for UK and US counterparts.
• Stronger than expected initial releases for German CPI have played a large role (national 2.6% vs cons 2.4 after 2.2%, HICP 2.9% vs cons 2.6 after 2.4%). Final Eurozone PMIs for December also saw upward revisions and firmer price pressures including a notable uptick in input costs for service providers.
• ECB-dated ESTR OIS prices 24.5bp of cuts for the Jan 30 decision before a cumulative 102bp of cuts for 2025 having pared the earlier shift to less than 100bp of cuts.
• Back to Euribor pricing, the implied terminal yield of 2.05% seen for the Dec’25 contract (+4bp on the day) marks the highest expected terminal rate since the US presidential election on Nov 5.
• Tomorrow sees preliminary December CPI inflation for the Eurozone and various individual countries plus ECB inflation expectations. ECB speak is slow to resume for the new year though, with Villeroy next up on Tuesday afternoon.