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Eurodollar/Tsy Option Roundup

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BulletMarketsFixed Income
Short end rates rallied as Fed Chairman Powell ruled out 75bps hikes to address burgeoning inflation, yield curves bull steepened (2s10s +10.358 to 28.830 vs. 13.987 low in the first half!) as a result. Equities liked the less hawkish messaging as well, SPX emini futures ESM2 +130.0 in late trade nearing 4300.
  • Addressing question over "plausible soft landing" through judicious monetary policy: months of inversion at the front end of Reds (low measure of confidence in forward policy and/or Fed managing a soft landing/avoiding recession) is gradually off lows:
  • Red Sep (EDU3) currently trading 96.44 vs. Red Jun (EDM3) at 96.52, -0.080 vs. -0.11 this morning. Levels start to flatten out (dis-invert) around late Blue Dec'25/Mar'26 around 96.985.
  • Eurodollar option trade segued from large put position unwinds well ahead of the FOMC, followed by large upside call buying in late trade. Salient trade: paper bought +25,000 Dec 97.00 calls, 29.0 after some +20,000 Blue Jun 97.75 calls, 1.5. In puts, large Block -60,000 Sep 97.50/97.75 put spds, 18.5, hear unwind/taking profit.
  • In Treasury options, paper bought over 17,000 TYM 118.5 calls, 48-52 and +10,000 FVM 112.25 calls, 35 vs. 112-06.
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Short end rates rallied as Fed Chairman Powell ruled out 75bps hikes to address burgeoning inflation, yield curves bull steepened (2s10s +10.358 to 28.830 vs. 13.987 low in the first half!) as a result. Equities liked the less hawkish messaging as well, SPX emini futures ESM2 +130.0 in late trade nearing 4300.
  • Addressing question over "plausible soft landing" through judicious monetary policy: months of inversion at the front end of Reds (low measure of confidence in forward policy and/or Fed managing a soft landing/avoiding recession) is gradually off lows:
  • Red Sep (EDU3) currently trading 96.44 vs. Red Jun (EDM3) at 96.52, -0.080 vs. -0.11 this morning. Levels start to flatten out (dis-invert) around late Blue Dec'25/Mar'26 around 96.985.
  • Eurodollar option trade segued from large put position unwinds well ahead of the FOMC, followed by large upside call buying in late trade. Salient trade: paper bought +25,000 Dec 97.00 calls, 29.0 after some +20,000 Blue Jun 97.75 calls, 1.5. In puts, large Block -60,000 Sep 97.50/97.75 put spds, 18.5, hear unwind/taking profit.
  • In Treasury options, paper bought over 17,000 TYM 118.5 calls, 48-52 and +10,000 FVM 112.25 calls, 35 vs. 112-06.