Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the callable bond market in North America, specifically the surge in callable issuance in January 2026, which is noted as one of the most active months in years [6][10]. Core Insights and Arguments - **Callable Issuance Surge**: Callable issuance reached $37.1 billion by January 16, 2026, with $19.0 billion called, indicating strong market activity. Non-agency issuers drove net issuance, totaling $11.1 billion, while agencies typically issue larger notional amounts [10][11]. - **Volatility Dislocations**: The concentrated issuance created volatility dislocations across the market, particularly affecting the volatility surface [6][9]. - **Restructuring Recommendations**: The previous bull steepener trade is recommended to be unwound and restructured into a 1-year 3s30s bear steepener, which is expected to have a better carry profile [6][28]. - **Exit from Receiver Spread**: The recommendation includes exiting the 3m10y receiver spread trade due to the curve bear-steepening by 8 basis points, which has rendered the original trade out of the money [28][29]. Additional Important Insights - **Vega Supply**: The vega supply from Bermudan callable issuance reached approximately $3.5 million, close to the highest level in three years, with supranational, financial, and agency issuers each accounting for about one-third of this supply [16][17]. - **Market Dynamics**: The strong activity from supranational issuers is attributed to demand from Chinese banks seeking high-carry bonds ahead of the Chinese New Year [17]. - **Agency Issuance Outlook**: There is a potential risk of increased issuance from Fannie Mae and Freddie Mac following a government announcement regarding mortgage purchases, which could exert downward pressure on top-left volatility [18]. - **Trade Ideas**: The call outlines several trade ideas, including entering a conditional bear steepener to maintain steepening exposure in a positive carry format, and the preference for low strikes to improve entry levels [31][32]. This summary encapsulates the key points discussed in the conference call, highlighting the current state of the callable bond market, strategic recommendations, and potential risks and opportunities for investors.