US FISCAL: Deficits Continue To Rise
Feb-12 19:39
The federal budget deficit came in at $128.6B in January, well above the $94.8B expected and $21.9B in January 2024 (Dec 2024 was $86.7B) This was the biggest January deficit since 2021.
- The fiscal accounts have clearly deteriorated in nominal terms vs the prior year: the deficit has totaled $840B in the current fiscal year to date, compared with $532B in the prior year. This is the biggest cumulative deficit yet recorded in the first 4 months of the fiscal year in nominal terms (see chart).
- On a 12-month basis, the fiscal deficit hit $2.14T, the highest over such a period since July 2023 ($2.326T).
- One culprit: interest costs on the public debt have increased by $45B in this fiscal year so far, from $357B in the prior year, and at roughly 3.1% of GDP on an annual basis could exceed early 1990s proportions (in nominal terms, debt payments are due to set a clearer record).
- But the deepening deficit is more broad-based: for the year to date, receipts are up 1% Y/Y to $1.60T but spending is up 15% to $2.44T.
- The growth of the economy has helped keep the deficit relatively contained as a percentage of GDP (around 7% on a 12-month rolling basis in January).
- But this is still an extraordinarily elevated figure that comes amid the Congressional process to pass tax cuts. The House's budget resolution just out includes $4.5 trillion for the House Way and Means Committee to write up Trump's tax agenda, including the extension of 2017 tax cuts and potentially new reforms to cover campaign pledges like exempting tipped earnings from tax, while reducing mandatory spending by $2T and a $4T increase to the debt limit.
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US 10YR FUTURE TECHS: (H5) Trend Needle Points South
Jan-13 19:36
- RES 4: 111-20+ High 6 and the bull trigger
- RES 3: 110-25 High Dec 12
- RES 2: 109-28 50-day EMA
- RES 1: 108-26/109-06 20-day EMA / High Dec 31
- PRICE: 107-10+ @ 19:25 GMT Jan 13
- SUP 1: 107-06 Intraday low
- SUP 2: 107-04 Low Apr 25 ‘24 and a key support
- SUP 3: 107-00 Round number support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
The trend condition in Treasury futures is unchanged and remains bearish. Today’s bearish start to the week, has once again, confirmed a resumption of the downtrend. Sights are on 107-04 next, a Fibonacci projection. Note too that moving average studies remain in a bear-mode position highlighting a dominant downtrend. Key short-term resistance is seen at 108-26, the 20-day EMA.
PIPELINE: Corporate Issuance Roundup: $13.85B to Price Monday
Jan-13 19:14
$13.85B to price Monday, $3B KFW, $2B CADES and others rolled to Tuesday
- Date $MM Issuer (Priced *, Launch #)
- 01/13 $2.5B #Standard Chartered $1B 4NC3 +105, $500M 4NC3 SOFR+124, $1B 11NC10 +143
- 01/13 $2B #Deere $1.25B 10Y +68, $750M 30Y +75
- 01/13 $1.75B #Rabobank $700M 3Y +40, $300M 3Y SOFR+60, $750M 8NC7 +100
- 01/13 $1.5B #CBA 5Y SOFR+69
- 01/13 $1.2B #Eastern Energy Gas $700M 10Y +105, $500M 30Y +125
- 01/13 $1B #Micron 10Y +102
- 01/13 $1B *EBRD 5.5Y SOFR+42
- 01/13 $1B #Plains All American 10Y +120
- 01/13 $650M Blue Owl Tech Fin 3Y +185
- 01/13 $500M #Apollo Debt Solutions 7Y +185
- 01/13 $750M #Ares Strategic 7Y +175
- 01/13 $Benchmark KHFC 5Y +95a, 5Y SOFR
- May price Tuesday:
- 01/13 $3B KFW +5Y +43a
- 01/14 $2B CADES 5Y SOFR+70a
- 01/13 $Benchmark British Colombia 3Y SOFR+46a
- 01/14 $Benchmark BNG Bank 5Y SOFR+50a
- 01/14 $Benchmark CAF 5Y SOFR+90a
- 01/14 $Benchmark IFC 3Y SOFR+33a
US: Biden's Final Foreign Policy Speech Underway Shortly
Jan-13 19:01
US President Joe Biden is shortly due to deliver the final foreign policy address of his presidency. A livestream of the speech, taking place at the State Department, is available here.
- The speech kicks off Biden's farewell week to US politics: On Tuesday, he’ll deliver White House remarks on conservation; on Wednesday he will deliver his final Oval Office address; on Thursday, he will attend a final event at the Department of Defence; and on Friday, he will address the US Council of Mayors.
- A senior administration official told reporters: “[Biden] will describe how we reclaimed America’s global leadership as a force of stability, put our adversaries in a position of weakness, effectively navigated turbulence around the world and made America stronger at every step… He will discuss how we have dealt with the challenges and threats America faces and ensured that America — not our adversaries — are in the driver’s seat, best positioned to shape our future, and how he will hand the next administration a stronger hand than he inherited.”
- Biden is unlikely to speak in detail on the withdrawal from Afghanistan or the situation in Gaza – two foreign policy issues that undermined his bid for a second presidential term.
- A second Biden administration official told reporters, on Biden’s Oval Office speech: “It’ll be … really very rooted in the moment we’re in and where we go from here. It’ll be his last big chance to communicate with the country.”
