US TSYS: Late SOFR/Treasury Option Roundup: Puts Hedging Tariff Rally Reversal
Apr-03 18:57
Surge in SOFR & Treasury option trade Thursday, SOFR seeing much better put volumes - some unwinds w...
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PIPELINE: Corporate Bond Update: Mars Jumbo Issuance Chatter
Mar-04 18:51
- Market chatter in credit space is that Mars Inc, a family-owned, global leader in pet care, snacking and food, is looking to issue as much as $30B over as many as 8 tranches in the near term (possibly tomorrow after a conf call with investors today)
- The "jumbo" issuance is expected to help finance it's purchase of Kellanova, also a snacking/food related company for "$83.50 per share in cash, for a total consideration of $35.9B" back in August 2024.
- Estimates vary from $25B to $30B which would put it comfortably in the top ten largest corporate debt issuance on record.
EGBS: Futures Test Key Short-Term Support On Whatever It Takes Defense Moment
Mar-04 18:49
- Bund futures have slid in late trading on Merz-Klingbeil comments around submitting a proposal to change the debt brake in Germany next week and setting up to a EUR 500bn special defense fund.
- RXH5 extended the initial slide to have hit fresh lows of 130.93 (latest 131.07).
- It’s easily through 131.79 (Mar 3 low) and also a bear trigger at 131.26 (Feb 19 low), testing the key short-term support at 131.00 (Jan 24 low). After that lies 130.28 (Jan 15 low).
- Bloomberg writes that “Germany will set up a €500 billion ($528 billion) fund as part of a sweeping policy overhaul to tackle urgently needed investments in defense and infrastructure, according to chancellor-in-waiting Friedrich Merz. Merz, speaking to reporters in Berlin Tuesday, also said that spending over 1% of GDP will be exempted from the country’s debt brake.”
- Handelsblatt writes on it more specifically being E500bn for infrastructure spending over a period of 10 years.
- Whilst the magnitude of the infrastructure fund looks in keeping with Reuters reports over the weekend (E400-500bn) and it seems to have no specific mention of a separate defense fund (which Reuters sources had seen at E400bn), - which could argue for some paring of the sharp move – the bearish reaction is likely being sustained by Merz saying "I want to make it very clear: In view of the threats to our freedom and peace on our continent, our defense must now also be based on 'whatever it takes,'" (per a translation from Handelsblatt coverage).
FOREX: Greenback Weakness Extends, USDCHF Slides Below 0.8900
Mar-04 18:36
- Tariff considerations have been a primary driver of FX sentiment on Tuesday, with Mexican peso & Canadian dollar weakness persisting across the session. Their depreciation may have been somewhat offset by broader dollar weakness, as the ongoing stagflationary concerns regarding the US economy also gain traction. This has placed the Ice Dollar index at its lowest level since December 09, printing a low of 105.88.
- The DXY break to new yearly lows coincided with several key technical levels giving way across the majors. For EURUSD, spot has broken a cluster of resistance between 1.0525/33 which has been the key focus in recent sessions. The pair was given an additional late boost from Germany’s conservative leader, who provided details on changing the debt brake, prompting EURUSD to extend to ~1.0575. A close at current levels would highlight an important technical break, providing the foundation for a stronger bullish short-term theme, initially opening 1.0630, the Dec 6 high.
- USDJPY also broke below 148.60 support, a level that had been building in significance. Spot traded as low as 148.10 but has bounced back closer to 149.00 ahead of the APAC crossover. Today’s breach does strengthen the current bearish condition and signal scope for a more protracted move lower to 146.95, a Fibonacci retracement.
- USDCHF is down 0.86% on the session, standing out in G10. In recent sessions, both 20- and 50-day exponential moving averages have moved into a bear-mode, signalling scope for further downside. Support levels remain scant, with a 50% Fibonacci retracement point (drawn from 2024 low – 2025 high) at 0.8788, the immediate technical level of note.
- Lower US yields and equities prompted further pressure on AUDJPY, which briefly extended its 3-week slide to 5.6%, reaching a low of 91.86 and narrowing the gap to key support ~90.20. Australian GDP data is due on Wednesday, before Swiss CPI. US ADP and ISM Services PMI are also scheduled.
