MEXICO: February Industrial Prodcution Rises 2.5% M/m, Above Expectations

Option desks reported heavy SOFR put volume overnight, particularly a sale of over 70,000 Apr'25 put condors. Treasury option volume less robust, flow paired. Underlying futures under pressure, extending moderate lows at the moment. Projected rate cuts through mid-2025 recede vs. late Tuesday levels (*) as follows: Mar'25 steady at -1bp, May'25 at -9.4bp (-10.7bp), Jun'25 at -26bp (-28.2bp), Jul'25 at -37.5bp (-40.5bp). Dec'25 had priced in three 25bp cuts this morning now show -73.2bp.

• SOFR Options:
• -72,000 SFRJ 95.68/95.75/95.81/95.87 put condors, 1.5 ref 95.995
• 5,000 SFRJ 95.62/95.68/95.75/95.81 put condors
• 10,000 SFRM5 95.62/95.75 put spds vs. 96.00/96.25/96.37/96.50 call condors
• 3,000 SFRZ5 96.50/97.00/97.50 call flys ref 96.385
• 5,000 0QJ5 96.00/96.25 2x1 put spds ref 96.53 to -.54
• 3,000 SFRM5 96.00/96.18/96.37 call flys ref 95.98
• 6,000 SFRZ5 96.50/96.75 call spds ref 96.385
• Treasury Options:
• 10,000 TYJ5 110.25/110.75 2x1 put spds ref 110-27.5
• 3,100 FVM5 109.25/110.5 call spds ref 107-28.25
• 2,000 TYJ5 109/109.5/110 put trees ref 110-26.5
• over 4,400 TYJ5 112.25 calls, 9 ref 110-27

Wires carrying comments from US Secretary of State Marco Rubio following the high-profile talks with Ukrainian officials in Saudi Arabia on 11 March. Says that the US will have contact with Russian officials on Wednesday (today) and that the 'Russian reaction is not known', but that 'We hope to have a positive answer from Russia'. Rubio says 'We strongly urge Russia to end all hostilities...there is no military solution to this conflict.'

• On talks with Ukraine says that 'We had conversations about territorial concessions', but that the 'bulk of conversation with Ukraine was what a negotiation process would look like'.
• Says that 'Ukraine needs a sufficient deterrent against future attacks', but that he 'would not couch the minerals deal as a security guarantee'. The acknowledgement of Kyiv's need for 'sufficient deterrent' will be seen as another possible sign that the US is moving towards providing long-standing support for Ukraine, but certainly not a concrete commitment.
• Rubio claims that 'European sanctions issue will be on the table', and that 'Europeans need to be involved in this regard.' European countries have demanded throughout that they must be involved in peace talks alongside Ukraine. Remains to be seen whether Rubio is indicating EU/Europe involvement in ceasefire talks or just pushing Brussels/London to end sanctions on Russia in exchange for a ceasefire.
• Livestream of Rubio's comments here. 

Earlier, the Kremlin claimed that it would not decide on the proposed 30-day ceasefire until it had spoken with the US (see 'RUSSIA: Kremlin Spox-US-Ukraine Talks Debrief Needed Before Ceasefire Decision', 1001GMT).

• On the commodity front, Gold is in consolidation mode. The trend condition is unchanged, it remains bullish and the recent pullback appears corrective. A resumption of gains would refocus attention on $2962.2, a 2.00 projection of the Nov 14 - Dec 12 - 19 price swing. This would also open the $3000.0 handle. On the downside, a move lower would instead suggest scope for a deeper correction and expose support around the 50-day EMA, at $2829.8. The 50-day average represents a key support.
• In the oil space, a bearish trend condition in WTI futures remains intact and the contract is trading at its recent lows. The latest sell-off has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. Key short-term pivot resistance is seen at $70.20, the 50-day EMA.