LNG: Gas Starts Week Lower, US Prices Down Today On Ceasefire News
European natural gas jumped at the start of Monday’s trading to EUR 42.44 but then trended lower through the day as markets relaxed as oil and gas infrastructure has been avoided in Iran-Israel strikes. The closure of Qatari airspace halted the sell off but in the end Iran’s response to US attacks on its nuclear facilities was muted. Gas is likely to trade lower when it opens following news of a ceasefire deal. US Henry Hub is down 0.8% so far today.
- European gas prices fell 0.7% to EUR 40.65 yesterday but are still up almost 19% in June. Initial support is at EUR 37.49, 20-day EMA. Europe remains vulnerable to global supply disruptions as it refills storage ahead of next winter.
- US gas fell 4.4% to $3.68 to be up 6.7% this month and is down 0.8% to $3.67 today but off a low of $3.65. It is now 16.8% lower than Friday’s high at $4.15. Warmer weather expected for the eastern US should provide support to prices but with robust inventories any spike in cooling demand is unlikely to drive gas sharply higher. Temperatures are forecast to fall in much of the US over July 3-7, according to Vaisala.
- Officially, Iran will begin the truce in 6 hours allowing all planned missions to take place followed by Israel “upon the 12th hour”.
- Iran responded to the US attacks on its nuclear facilities on the weekend by targeting its base in Qatar. It notified Qatar first though and the missiles were intercepted causing little damage. VP Vance said that the move was “symbolic”.
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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".
