US STOCKS: Dips Remain Supported, Focus Turns To All-Time Highs
The ESU5 Overnight range was 5993.25 - 6081.50, Asia is currently trading around 6107. A combination of some dovish Fed speak and a muted and well contained Iranian response to the US bombings have seen a market poised to correct lower completely reverse, and is now again eyeing the all time highs. President Trump's announcement of a ceasefire this morning has seen these moves extend in early Asian trading, ESU5 +0.50%, NQU5 +0.72%.
- Lance Roberts on X: “Sentiment and positioning remain neutral across the spectrum of professional investors. Given the underweight conditions, it is unsurprising the market is not reacting negatively to the Iran news this morning.” See Graph below.
- (BBG) - “The S&P 500’s sharp rally has created an extraordinary deviation -- one of the widest gaps in years -- between macro fair-value models and actual market prices, and closing it would likely require a rarely achieved leap of 30% in earnings over the next year or significant Federal Reserve easing, according to Bloomberg Intelligence.”
- A quite remarkable turnaround for stocks, again points to a market that is still underweight as dips continue to be well supported. This in the face of some well documented headwinds that have been building. These include :
- Share buybacks are now in their blackout period, will the absence of this large underlying bid reportedly around $40 billion a week, allow for some sort of a retracement.
- This together with what looks to be some large month-end rebalancing should provide some decent headwinds for US Equities in the short-term.
Fig 1: Equity Positioning
Source: @LanceRoberts
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
