US DATA: Corporate Profit Share A Buffer To Adverse Growth Surprises [2/2]
Mar-27 18:35
- It’s hard to say there has been much clarity for business decisions through Q1, although the corporate profit share rising from 11.6% GDP to 12.2% GDP in Q4, back closer to historical highs, can provide a sizeable buffer if needed.
- As for what might have happened to these balances since Q4, trade deficits have of course ballooned. Today’s advance goods report for February showed a three-month deficit equivalent to 5.7% GDP vs 4.2% GDP in the three months to November - a large part of this may admittedly be shifts in monetary gold but it’s still a stark widening.
- The Trump administration has been cutting federal government jobs but it remains to be seen what broader impact it’s having on fiscal policy.
- Should there be no progress at trimming these huge fiscal deficits, the private sector will by identity have reduced its net surpluses against this widening in the current account deficit. One area that could be seen in is margin compression under tariff-induced higher inflation.
- On the flipside, should household uncertainty (evidenced by sharp recent declines in consumer confidence) see higher savings rates, it could have put upward pressure on fiscal deficits.
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GBPUSD TECHS: Bull Cycle Remains In Play
Feb-25 18:30
- RES 4: 1.2811 High Dec 6 ‘24
- RES 3: 1.2831 2.0% 10-dma envelope
- RES 2: 1.2767 50.0% retracement of the Sep 26 ‘24 - Jan 13 bear leg
- RES 1: 1.2691 High Feb 24
- PRICE: 1.2654 @ 16:42 GMT Feb 25
- SUP 1: 1.2563 Low Feb 19
- SUP 2: 1.2522 50-day EMA
- SUP 3: 1.2440 Low Feb 13
- SUP 4: 1.2333 Low Feb 11 and a key support
A bull cycle in GBPUSD remains in play and the pair is holding on to the bulk of its recent gains. Fresh short-term gains confirm a resumption of the uptrend and maintain the current sequence of higher highs and higher lows. An extension would strengthen the bullish condition and open 1.2767, the 50.0% retracement of the Sep 26 ‘24 - Jan 13 bear leg. Initial firm support to watch is 1.2522, the 50-day EMA.
PIPELINE: Corporate Bond Issuance: $5B Citigroup 3Pt Launched
Feb-25 18:26
- Date $MM Issuer (Priced *, Launch #)
- 02/25 $5B #Citigroup $2.25B 4NC3 +70, $750M 4NC3 SOFR, $2B 31NC30 +105
- 02/25 $1.8B #Southern Co 30NC10 6.375%
- 02/25 $1B #Dow Chemical $400M 10Y +105, $600M 30Y +140
- 02/25 $750M #KeyCorp 6NC5 +98
- 02/25 $500M #Emerson Electric WNG 10Y +70
- 02/25 $Benchmark State Street Corp 3Y +45, 5Y +60, 11NC10 +85
- 02/25 $Benchmark Caterpillar 3Y +55a, 3Y SOFR
US: FED Reverse Repo Operation
Feb-25 18:21
RRP usage rebounds to an even $96.0B this afternoon from $76.818B on Monday. Compares to Friday, February 14 low of $58.770B - the lowest level since mid-April 2021. The number of counterparties at 36 from 30 prior.
