US: GOP Faces Crunch Week For Megabill Amid Concerns From Moderates And Cons.

Two-way movements in Fed pricing after the latest rounds of data, with the firmer-than-expected Q1 PCE and personal consumption prints, as well as a Q1 GDP release that wasn’t as bad as many expected in the wake of yesterday’s trade data (-0.3% vs. -0.2% in the BBG median, latter deemed stale in light of yesterday’s data), offsetting the softer-than-expected ADP employment release. 

• Zooming out, the Q1 data underscores the stagflationary risks evident in the economy.
• Fed Funds show 2.5bp of cuts for May, 16bp through June, 39bp through July, 60.5bp through September, 78.5bp through October and 97.5bp through year-end.
• That compares to 2.5bp, 17bp, 38.5bp, 60bp, 78bp and 97bp ahead of the data.
• Market briefly priced ~99.5bp of Fed cuts through year-end on the back of the ADP reading, before swing back to ~95bp following the Q1 data.
• Focus now moves to March PCE data, due at 10:00 NY/15:00 London.

 The Treasury's advisory committee (TBAC) appeared to be less convinced this quarter that guidance on future issuance should be changed, apparently because of the recent volatility in Treasury market uncertainty amid an uncertain backdrop: "members were mixed on the value of the forward guidance language. Some members preferred dropping the language altogether, while others felt a shift in the language might be received poorly in light of the meaningful increase in uncertainty around tariffs and the economic outlook."

• In the previous quarter's refunding, TBAC "uniformly encouraged Treasury to consider removing or modifying the forward guidance on nominal coupon and FRN auction sizes that has been in the refunding statement for the past four quarters. Some members preferred dropping the language altogether to reflect the uncertain outlook, though the majority preferred moderating the language at this meeting."
• It may be that the guidance ("anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters") has outlived its usefulness, but that Treasury will refrain from changing this communication ecause of market sensitivities to any changes.

• Most major pairs looking through the downtick in risk on the back of the US numbers, however AUD/USD has broken lower, showing through the overnight low to narrow the gap with the more consequential support at 0.6344. The break here of trendline support drawn off the Apr 16 low on the 15-minute candle chart may add to near-term downside momentum, with the currency re-correlating with both equities and the uptick in US yields.
• The e-mini S&P is holding the entirety of the post-data losses, pointing to a lower open on Wall Street of near 1.5% - snapping the six session winning streak for the S&P 500.