US TSY OPTIONS: Large March'25 2Y & 10Y Put Volumes

OEH5 118/119cs 1x2, bought for 8 in 1.5k.

• CIBC write on the “meaningful” repricing in the Canadian front-end over the holiday season, with terminal rate expectations declining nearly 30bps to just below 2.75%, the mid-point of the Bank’s estimated neutral rate range.
• “But even with front-end levels now looking more consistent with our own expectation for the Bank, the distribution getting to that end-point looks unrealistic. For example, markets expect the Bank to reach this policy level by the middle of 2026, with no attendant curvature to speak of”
• When BoC terminal is priced in either 1y1y or 2y1y vs FOMC terminal pricing in 3y1y, they see two implications: “CAD steepeners versus U.S. flatteners have a small ‘window’ for success, and that window is now – our favourite expression of this dynamic is the 5s10s box.”
• “Once we get deeper into Q1 and through the inauguration, we see more risk that Fed pricing is pulled forward. To eventually fade cross-market richness we like being short CAD 2s versus U.S. 5s, but will need to get past the January BoC meeting.”

Surge in corporate issuance expected as dearth of December supply works through backlog. 

• Date $MM Issuer (Priced *, Launch #)
• 01/06 $Benchmark Saudi Arabia 3Y +120a, 6Y +130a, 10Y +140a (Saudi Arabia last issued $5B sukuk on May 28: $1.25B 3Y +60, $1.5B 6Y +75, $2.25B 10Y +85)
• 01/06 $Benchmark Societe Generale 4.25NC3.25 +150a, 4.25NC3.25 SOFR, 8.25NC7.25 +190a
• 01/06 $Benchmark National Australia Bank (NAB) 5Y +75a, 5Y SOFR, 11NC10 +150a
• 01/06 $Benchmark Toyota Motor Cr 2Y +55a, 2Y SOFR, 5Y +80a, 10Y +100a
• 01/06 $Benchmark CRH SMW Finance 5Y +100a, 10Y +115a, 30Y +135a
• 01/06 $Benchmark Hyundai Cap Am 3Y +100a, 3Y SOFR, 5Y +120a
• 01/06 $Benchmark CIBC 3NC2 +85a, 3NC2 SOFR, 6NC5 +110a
• 01/06 $Benchmark Broadcom +3Y +75a, +5Y +85a, +7Y +95a
• 01/06 $Benchmark John Deere Capital 2Y +45a, 3Y +55a
• 01/06 $Benchmark Williams Cos 10Y +125a, 30Y +145a
• 01/06 $Benchmark India Export-Import Bank 10Y +130a
• 01/06 $Benchmark MUFG 6NC5 +100a, 11NC10 +115
• 01/06 $Benchmark Sixth Street Lending 5Y +210a
• 01/06 $Benchmark Southern Cal Edison 10Y, 30Y
• 01/06 $Benchmark Corebridge 3Y +80a, 3Y SOFR
• 01/06 $Benchmark BNP Paribas 8NC7 +155a
• 01/06 $Benchmark Lincoln Financial 5Y +115a
• 01/06 $Benchmark Caterpillar 3pt, dets TBA
• 01/06 $Benchmark UBS 3NC2 +85a
• 01/06 $500M DBJ WNG 10Y SOFR+78a
• 01/06 $Benchmark Kexim investor calls
• 01/06 $Benchmark World Bank 7Y +57a
• 01/06 $Benchmark United Mexican States filed prospectus to issue notes due 2030, 2037 and 2055. Last issued $1.8B in August 2022: Mexico 2033 +235.
• Expected Tuesday:
• 01/07 $Benchmark EIB 5Y SOFR+45a