US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes

• Treasuries finish higher after the Federal Reserve held rates steady at 4.25-4.5%, reiterating the patience as the US economy is still solid. "The labor market is solid. Inflation is low. We can afford to be patient as things unfold. There's no real cost to our waiting at this point.
• Powell added that while there has been some "souring sentiment ... the shock from tariffs hasn’t hit yet. We’re going to be looking at both sentiment and real economic data. It’s not at all clear what the appropriate response for monetary policy is. Unemployment hasn’t gone up, job creation is fine and layoffs aren’t increasing in any kind of impressive way," Powell added.
• Tsy Jun'25 10Y futures are +7 at 111-17 after the bell (111-04 low/111-22 high), still inside technical support and resistance levels. Curves mixed, 2s10s -1.551 at 49.222, 5s30s +.578 at 90.707.
• Cross asset update: Bbg US$ index +6.41 at 1222.75; stocks firmer after Tump rescinds global chip curbs (SPX eminis +26.5 at 5652.50), Gold weaker (-63.20 at 3368.51), Crude lower (WTI -1.13 at 57.96).

• RES 4: 1.4415 High Apr 1
• RES 3: 1.4296 High Apr 7 
• RES 2: 1.4055 50-day EMA 
• RES 1: 1.3901 20-day EMA  
• PRICE: 1.3777 @ 16:41 BST May 7
• SUP 1: 1.3751 Low May 6 
• SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
• SUP 3: 1.3696 Low Oct 10 2024
• SUP 4: 1.3643 Low Oct 9 ‘24 

Bearish conditions in USDCAD remain intact and the pair is trading at its recent lows. A fresh cycle low last Friday reinforces the bearish theme signalling scope for a continuation, near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Note that Moving average studies are in a bear mode position, highlighting a dominant downtrend. On the upside, first resistance to watch is 1.3901, the 20-day EMA.  

• Powell consistently talking on the need for patience and greater clarity before moving rates (we count “wait” 25 times in a rough transcript) has reversed the initially modest dovish reaction to the FOMC announcement.
• Politics clouds the moves though. As we noted earlier the initial rally also seemed to be boosted by Trump headlines shortly beforehand on being unwilling to lower tariffs on China in order to get it to the table landing. On the other hand, Bloomberg reporting just now that the Trump administration plans to rescind Biden-era AI chip curbs has marginally helped pare gains.
• It leaves a Fed Funds rate path back broadly unchanged for 2025 meetings from pre-FOMC levels.
• Cumulative cuts from an assumed 4.33% effective: 6bp Jun, 22bp Jul, 43bp Sep, 60.5bp Oct and 79bp Dec.
• SOFR futures implied yields are holding some small declines further out the curve, with SFRZ6 2bps lower post-FOMC (for -1.5bp on the day). This sees the terminal yield of 3.105% having technically ticked over from U6 earlier today.