FED: FOMC Members, Staff Grappled With Stagflation Risks At May Meeting

• Treasury futures extend gains after Tsy financing estimate released (raising current quarter by $391B to $514B), final recommended financing levels release this Wednesday at 0830ET.
• Jun'25 10Y currently +13 at 111-29.5, through resistance of 111-25 (50.0% retracement of the Apr 7 - 11 bear leg) -- focus on next level at 112-12, the 61.8% retracement point.
• Cross asset: BBG US$ index drifting lower to 1220.19 (-5.86); stocks bouncing off second half lows: S&P eminis -8.0 at 5541.75.

Treasury's latest borrowing / financing requirements estimates were slightly higher - but broadly in line with - MNI's estimates: $514B for the Apr-Jun quarter, and $554B for the Jul-Sep quarter (MNI had pencilled in $500B for each quarter).

• Financing needs are -$17B for Apr-Jun (MNI estimated -$14B) with $480B in Jul-Sep (MNI: $430B).
• The assumption that Treasury would maintain its end-quarter cash balance target of $850B proved correct.
• The Apr-Jun borrowing estimate was indeed raised significantly (by $391B) but this was entirely a function of the required cash raise as we discussed earlier today. As Treasury points out, "excluding the lower than assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is $53 billion lower than announced in February.

• RES 4: 165.43 High Nov 8        
• RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance   
• RES 2: 164.55 High Jan 7
• RES 1: 163.76/164.19 High Apr 25 / High Mar 18 and the bull trigger 
• PRICE: 162.47 @ 16:50 GMT Apr 28 
• SUP 1: 161.37/159.48 50-day EMA / Low Apr 9    
• SUP 2: 158.30 Low Apr 7 and key support 
• SUP 3: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle 
• SUP 4: 155.60 Low Low Mar 4 

The recent pullback in EURJPY appears corrective and the trend condition remains bullish. Last week’s gains reinforce this theme. Key S/T support lies at 158.30, the Apr 7 low. A break of it is required to signal scope for a deeper retracement. This would open 157.02, a Fibonacci retracement. First support to watch is 161.37, the 50-day EMA. Attention is on 164.19, the Mar 18 high and a bull trigger. Clearance of this hurdle would resume the uptrend.