OIL: OPEC+ More Effective Than Sanctions at Restraining Russia’s Supply
OPEC+ production quotas have played a larger role in reducing Russian energy exports than Western sa...
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OPTIONS: Tuesday NY Cut Should Take Focus Given Trump Heads, Return of US
With the US returning in earnest tomorrow for the first full day of the second Trump Presidency, and the sharp USD swings today, we'd expect focus on Tuesday's expiry schedule to pick up into 10am NY time.
Decent optionality building around the $1.04 handle and above in EUR/USD, while a sizeable strike in USD/JPY at Y156 could limit losses:
- EUR/USD: $1.0300(E2.0bln), $1.0325(E3.3bln), $1.0400(E2.2bln), $1.0415-20(E1.3bln), $1.0450(E921mln), $1.0490-00(E1.4bln)
- USD/JPY: Y153.00($1.5bln), Y156.00-05($2.2bln)
- AUD/USD: $0.6200(A$775mln), $0.6245-50(A$939mln)
- USD/CAD: C$1.4285($703mln)
ECB: /SWAPS: ECB Survey Highlights Deteriorating Market Liquidity In Autumn 2024
The ECB’s December 2024 SESFOD survey (Survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets) reports a tightening in credit terms and conditions between September and November 2024 “as general market liquidity deteriorated”.
- “A small net percentage of survey respondents expected overall terms to tighten further across all counterparty types in the three months ahead (i.e. in the period from December 2024 to February 2025)”.
- “A significant net percentage of survey respondents reported that financing rates/spreads had increased for funding secured against all collateral types”.
- “Survey respondents also reported increased demand for funding across all collateral types. Moreover, they reported a slight deterioration in the liquidity and functioning of collateral markets”.
- A reminder that German paper saw a notable cheapening against swaps through the Autumn, with the Bund ASW (vs 3-month Euribor) tightening from over 25bps at the end of September to below 0bps by mid-November (an all-time/cycle low).
- Despite retracing a portion of those moves in the second half of November, long-end spreads have re-approached those record levels this month. Analysts have highlighted increased free-float from ECB balance sheet run-off and heavy sovereign supply as fundamental drivers of swap spread narrowing in 2025.
- Press release: https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250120~9384966317.en.html
OPTIONS: Expiries for Jan21 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0300(E2.0bln), $1.0325(E3.3bln), $1.0400(E2.2bln), $1.0415-20(E1.3bln), $1.0450(E921mln), $1.0490-00(E1.4bln)
- USD/JPY: Y153.00($1.5bln), Y156.00-05($2.2bln)
- EUR/JPY: Y159.40(E1.3bln), Y166.20($1.2bln)
- AUD/USD: $0.6200(A$775mln), $0.6245-50(A$939mln)
- USD/CAD: C$1.4285($703mln)
