SPAIN: Attorney General To Stand Trial In Further Blow To PM's Position
The Supreme Court has upheld the prosecution of attorney-general Alvaro Garcia Ortiz for the alleged leaking of information about an investigation into the boyfriend of Madrid regional president, Isabel Diaz Ayuso, from the opposition conservative Popular Party. The court's ruling will mean that Garcia Ortiz will be forced to take the stand and testify in the Supreme Court trial that is due to get underway in the coming months. Garcia Ortiz has insisted he will not resign ahead of the trial.
- The AG was appointed by PM Pedro Sanchez in 2022, and his alleged wrongdoing in leaking information on a tax probe into Diaz Ayuso's partner comes with the PM already under extreme pressure following the arrest of a former senior official from Sanchez's centre-left PSOE in June, and accusations of sexual harrassement against the head of institutional coordination at the Moncloa palace, the office and official residence of the prime minister.
- In a press conference on 28 July, Sanchez insisted that he would present a 2026 budget and there would not be snap elections before 2027. Notably, he did not confirm if that budget would be presented to the Congress of Deputies, given the gov'ts minority status and his inability to pass a state budget for 2025.
- An internal challenge from the PSOE could prove more likely than a confidence vote to oust the PM. Spain's system only allows for 'constructive' confidence votes, where a new PM candidate can secure a majority of deputies' support, an almost-impossible prospect given the fragmentation in parliament.
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
