STIR FUTURES: BLOCK: Large Sep'25 SOFR Sale

The federal budget deficit came in a little higher than expected in May, at $316.0B (vs $314.0B consensus and as estimated by the CBO on Monday), per Treasury's monthly statement. That brought the FY2025 fiscal year (Oct-Sep) to date deficit to $1.365T, up $160B from the equivalent period in 2024 and, through the first 8 months, is set for the highest for a full FY in nominal terms since 2021. 

• MNI estimates the 12-month running deficit at around 6.6% of GDP, which is squarely in the middle of Treasury Sec Bessent's estimated 6.5-6.7% of GDP that he mentioned at a congressional committee hearing today.
• Cumulative FY expenditures came in at a new record $4.85T (+7.9% Y/Y)  vs revenue of $3.48T (+5.9% Y/Y). Both are set to reach all-time highs this year.
• The 12-month rolling deficit (which helps mitigate timing and other seasonal issues in the monthly comparisons) of $1.99T represents the third consecutive decline after the recent $2.15T peak in February. The 12-month running total of revenue likewise hit a new all-time high $5.11T, but expenditure continued to rise $7.11T (the all-time-high set in March 2021 at $7.62T).
• It would also represent a widening after 6.4% in FY2024 and 6.2% in FY2023.

• RES 4: 150.49 High Apr 2   
• RES 3: 149.28 High Apr 3
• RES 2: 147.67/148.65 High May 14 / 12 and a reversal trigger
• RES 1: 145.46/146.28 High Jun 11 / High May 29 and key resistance
• PRICE: 144.62 @ 16:32 BST Jun 11
• SUP 1: 142.12 Low May 27 and a key support
• SUP 2: 141.96 76.4% retracement of the Apr 22 - May 12 bull leg
• SUP 3: 139.89 Low Apr 22 and a bear trigger 
• SUP 4: 138.82 1.50 proj of the Feb 12 - Mar 11 - 28 price swing 

A short-term bull cycle in USDJPY remains in play - for now. The latest recovery is considered corrective and the trend condition is bearish. A resumption of weakness would open 142.12, the May 27 low. A clear break of this level would confirm a continuation of the bear leg and open 139.89, the Apr 22 low. MA studies remain in a clear bear-mode position too, highlighting a dominant downtrend. Key short-term resistance is 146.28, the May 29 high.

• Treasury futures are extending late session gains, Sep'25 10Y futures breaching initial technical resistance of 110-19.5/20.5 (50-day EMA / Jun 11 High) to 110-22.5 (+16).
• Next resistance above at 111-14.5 (High Jun 5 & 61.8% of the May 1 - 22 downleg).
• Curves steeper: 2s10s +1.578 at 46.336, 5s30s +4.726 at 88.731, 10Y yld taps 4.4065% low.
• Cross-asset update: Stocks did extend lows recently, lending to a moderate risk-off theme (SPX eminis taps 6006.25 low, trades 6023.5 last -21.25), Bbg US$ index inches off low of 1206.09 to 1206.50 (-4.09).