Post-LIBOR Settle Update: 3M Marches Higher, Hikes Moderate

Lead quarterly EDM2 dips -0.0025 to 98.2275 after latest 3M LIBOR set' climbs 0.02543 to new 2Y high of 1.69043% (+0.06443/wk). Rate hike pricing moderates slightly out the curve stable: balance of Whites through Golds (EDU2-EDH7) +0.005-0.025 w/ Greens-Blues narrowly outperforming.

• Inversion holds to front Reds: low mkt measure of confidence in Fed managing a soft landing/avoiding recession has extended: Red Sep (EDU3) currently trading 96.56 vs. Red Jun (EDM3) at 96.46. Inversion starts to flatten out (dis-invert) around Blue Sep'25-Dec'25 trading 96.94-.935.
• Monday option roundup: Generally light FI option volume Monday, same for underlying futures (TYU2 <960k by the bell) despite yields grinding to the highest levels since early May (all over 3%: 5YY 3.0368%, 10YY 3.0380%, 30YY 3.1908%).
• No data to start the week (no Fed-speak either w/ Fed in Blackout through June 16). Markets pre-occupied with Elon Musk threat to pull out of Twitter bid due to lack of spam/bot documentation, and UK PM Boris Johnson confidence vote in late trade. Also public Jan 6 insurrection hearing that start June 9.
• No overarching theme to describe Monday's trade, just short term positioning and/or tactical plays, such as a sale of 10,000 TYN 117.5/118.5 put spds at 22 (ref 118-08.5) looking for yields to retrace off current highs. Simple directional plays via buying July 10Y 121, 121.5 and 121.75 calls from 4-2. Scant Eurodollar trade had paper selling 10,000 short Jun 96.62 puts at 19.5 vs. 96.45/0.85%.