US DATA: Consumer Confidence Off Lows, But Remains Weak Overall (1/2)
The Conference Board's consumer confidence survey showed a notable improvement in sentiment in July, with the headline reading rising to 97.2 (96.0) from 95.2 prior (rev up from 93.0). The Present Situation reading dipped to 131.5 from an upwardly revised 133.0 in Jun (129.1 pre-rev), but Expectations improved to 74.4 from 69.9 (rev from 69.0). The report notes "all three components of the Expectation Index improved, with consumers feeling less pessimistic about future business conditions and employment, and more optimistic about future income."
- The Composite has stabilized after falling to 85.7 in April, while the Expectations reading is the highest since February - albeit combined with the continued softness in the Present Situation, these are still well below the late 2024 highs and consistent with subdued sentiment overall.
- Indeed per the report, "expectations remained below the threshold of 80 that typically signals a recession ahead for the sixth consecutive month".
- On the inflation front, expectations continue to abate, mirroring other surveys. The 1Y average and median inflation expectation fell to 5-month lows of 5.80% and 4.70% respectively, down from April peaks of 7.0% and 5.9% respectively. But there were multiple caveats noted in the report. Per the write-in responses, "tariffs remained top of mind and were mostly associated with concerns that they would lead to higher prices. In addition, references to high prices and inflation rose in July" despite the pullback in the survey metrics.
- The survey cutoff was July 20, and marking the first responses since the federal fiscal package passed earlier in the month - it doesn't appear to have had a major impact on sentiment, however: "A number of survey respondents mentioned the recent budget reconciliation legislation passed by Congress (referring to it as the “Big Beautiful Bill”)—with some consumers praising its potential positive economic impact and others expressing concerns. However, the bill and its implications were relatively low on the list of themes that consumers were focused on in July.”
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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.
