FINANCIALS: Santander - Credit Rating Upgrade from Fitch

• 0RG5 97.875/98.00/98.12c fly, bought for 1.75 in 4k.
• 0RG5 98.00/98.125/98.25c ladder, bought for 1 in 6k.

• RES 4: 111-20+ High 6 and the bull trigger 
• RES 3: 110-25   High Dec 12   
• RES 2: 109-28   50-day EMA  
• RES 1: 108-26/109-06 20-day EMA / High Dec 31 
• PRICE:‌‌ 107-09 @ 11:08 GMT Jan 13
• SUP 1: 107-06   Intraday low   
• SUP 2: 107-04   Low Apr 25 ‘24 and a key support  
• SUP 3: 107-00   Round number support
• SUP 4: 106-11   2.00 proj of the Oct 1 - 14 - 16 price swing  

The trend condition in Treasury futures is unchanged and remains bearish. Today’s bearish start to the week, has once again, confirmed a resumption of the downtrend. Sights are on 107-04 next, a Fibonacci projection. Note too that moving average studies remain in a bear-mode position highlighting a dominant downtrend. Key short-term resistance is seen at 108-26, the 20-day EMA.

• Fed Funds implied rates have continued to push higher overnight in an extension of the sell-off seen after Friday’s strong payrolls and U.Mich inflation expectations reports. A next cut has shifted from being considered around Jun-Jul meetings to not quite being fully priced for the year (admittedly 24.3bp).
• This week’s scheduled Fedspeak is much lighter after last week’s multiple mostly hawkish appearances, although with only Goolsbee speaking after payrolls.
• Next up sees Schmid (’25 voter) tomorrow before some focus on Kashkari (’26) and Williams (permanent) on Wed before the Fed’s blackout period starts on Friday midnight.
• Cumulative cuts from 4.33% effective: 0.5bp Jan, 4.5bp Mar, 8bp May, 15.5bp Jun, 17.5bp Jul and 24bp Dec.
• Recapping some of the analyst view changes since Friday’s payrolls report, ranked by a hawkish to dovish stance, all coming before this week’s inflation data: 

• BofA: No longer calls for cuts. Base case for extended hold, risks for next move skewed toward a hike.
• RBC: Now see the Fed on hold at 4.25-4.5% throughout 2025.
• Barclays: Expect just one 25bp cut this year, in June, before going on a more extended hold. “We think that the FOMC will resume 25bp cuts in June 2026, when we expect it to be evident in the data that price pressures from anticipated tariffs are not fueling broader inflationary pressures. All told, we expect three 25bp cuts in 2026, timed at the final three SEP meetings. Compared to our prior baseline, this effectively shifts one 25bp cut from March 2025 to December 2026.”
• MUFG: Now see longer Fed pause with next cut in Jun and only two cuts in 2025, terminal rate lifted 25bps to 3.75-4%. They also see QT continuing for longer, eyeing updates in early summer.
• JPM: Now see next cut in June before final one in Sept.
• GS: Now sees 2 cuts (June and Dec) vs previously 3 cuts this year, but still see terminal of 3.5-3.75%.
• Citi: Now sees next cut in May vs Jan previously.