EMISSIONS: UK ETS Authority Opens Consultation to Extend ETS Beyond 2030

Better SOFR put structure buying since the open, fading this morning's post-PPI rally with underlying futures scaling off of this morning's knee-jerk rally. Projected rate cuts through mid-2025 continue to retreat, current vs. late Friday levels* as follows: Jan'25 steady at -0.7bp, Mar'25 at -5.8bp (-4.9bp), May'25 -10.2bp (-9bp), Jun'25 -17.6bp (-16.5bp), Jul'25 at -20.4bp (-18.7bp).

• +3,000 SFRM5 95.81/95.93/96.18 2x3x1 call flys 3.0 ref 95.835
• +15,000 0QK5 94.75/95.00 put spds, 2.0 vs. 95.905/0.05%
• +10,000 SFRU5 95.50/95.75/96.00 put flys, 6.5
• +15,000 SFRZ5 95.37/95.62/95.87 put flys, 5.5-5.75 ref 95.895
• +5,000 SFRM5 95.87/96.31 call spds 8.0 ref 95.835
• +4,000 SFRG5 95.62/95.68/95.75 put flys 3.0 ref 95.74
• +5,000 SFRZ5 95.37/95.62/95.87 put flys 5.5 ref 95.875

• SFIM5 95.75/96.00cs, bought for 6.75 in 24k.
• SFIM5 95.70/96.00cs, bought for 8.75 and 9 in 20.5k.

Jake Sherman at Punchbowl News reports on X that House Speaker Mike Johnson (R-LA) is looking to extend the federal debt limit for the entirety of President-elect Donald Trump's term and will discuss options at a Republican conference meeting today.

• Sherman adds Johnson said the move would be “costly” - meaning democrats would exact a price for their votes, should the extension be moved outside of reconciliation - the mechanism by which the government can pass budget-related legislation along party lines.  
• Johnson said he’s “agnostic” whether the debt limit rides on reconciliation or via regular appropriations where it will need Democrat support. While Republicans are in a strong position to legislate a debt ceiling hike via reconciliation, including it in a major border security/energy/tax package could leave the GOP agenda vulnerable to a rebellion from conservative deficit hawks.  
• Johnson's comments come amid a spat with Democrats after the Speaker yesterday floated tying the debt limit to California wildfire aid. As a lengthy debt limit extension outside of reconciliation will require Democrat support. Johnson's move to attach the debt limit to a supplemental disaster aid could hasten passage of the bill but will certainly draw Democrat criticism.
• Senator Chris Murphy (D-CT) said, in response to reports of the debt limit-aid tie-up: "They need to raise the debt ceiling to pass their massive tax cut for the super wealthy. So the message is: we will only rebuild California if our billionaire and corporate friends get their money. Unreal."