Daily Brief Financials: ESR Group , US Treasury (10 Yr Generic), Nikkei 225 and more

In today’s briefing:

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance
High Government Borrowing: Nuanced Implications for US Treasuries
EQD | Nikkei Index Options Weekly – January 06 – 10

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance

The continuation of large budget deficits under the second Trump administration is causing concerns amongst investors about interest rate implications, but Treasury yields are determined by a multitude of factors.
High government borrowing will typically impart greater stress on financial markets if private sector borrowing is also strong. Long-end yield curve steepening may reflect funding issues due to buyer shortages.
Current expected returns on Treasuries (both nominal and real) are highly elevated compared to recent history and should offer decent protection for investors.

Weak price action to start the year for the Nikkei with little direction from USD/JPY which was grinding higher throughout the week.
Volatility at the start of the week helped push short term historic vol higher with at-the-money implied vol up about 1 point.
Volumes picked up substantially over year-end levels with Puts making up 53.5% of all contracts traded.

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