OIL PRODUCTS: Gasoil backwardation strengthens

The Biden administration is today launching an assault on Congress in a last minute bid to break a Republican blockade of the USICA/CHIPS Act, the multi-billion-dollar bill to stimulate domestic tech and ease dependence on China.

• The bill received bicameral and bipartisan support in Congress but is currently being stalled by Senate Minority Leader Mitch McConnell (R-KY) due to Senate Majority Leader Chuck Schumer's (D-NY) decision to advance a partisan reconciliation bill.
• 16:00 ET 21:00 BST: Commerce Secretary Gina Raimondo, Director of National Intelligence Avril Haines, and Deputy Defence Secretary Kathleen Hicks will lead a classified all-Senators briefing on the national security implications of failing to legislate the bill.
• This morning, Raimondo and Defence Secretary Lloyd Austin sent a letter to Congressional leaders urging the passage of the bill.
• The letter reads: “[CHIPS] is the only way to reduce our reliance on foreign-produced semiconductors. This funding is critical for our national security...”
• The letter continues: “If these funds are not appropriated in the coming weeks, the United States will miss out on the current wave of semiconductor investment... [and investment] will expand in countries that are already aggressively offering incentives, rather than here in the United States.”
• Austin’s signature will add credibility to the Biden administration’s national security argument and the military angle is likely to have more traction will Republican lawmakers.
• Austin: “Funding the CHIPS Act is critical to our national defense. Weapon systems employed on the battlefields of today and emerging technologies of tomorrow depend on our access to a steady, secure supply of microelectronics...”
• Today’s briefing may be the last chance for the Biden administration to convince Senate Republicans to drop their blockade of the bill. Should it fail, Democrats will likely try to force the legislation through the House without revisions but the Democrat House leadership will face an uphill battle convincing their reps to accept such overt subordination to the Senate.
• The Austin/Raimondo letter can be read here: https://punchbowl.news/2022-07-13_sgr-dsda-hill-le...

STIR futures globally being dragged lower by another beat for US CPI.

• SONIA futures through to the Dec-22 contract are not on their lows of the day, however, having drifted since opening lower after last night's Bailey speech and this morning's UK monthly GDP data. However, further out we have moved to new lows (although the curve still inverts after the Mar-23 contract. Reds are now up to 11.5 ticks lower on the day.
• In contrast, the entirety of the Euribor curve hit its low of the day in the aftermath of the US data, with the Jun-23 contract the biggest mover, down 12 ticks on the day at writing.