ASIA: Government Bond Issuance Today

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.

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".

• Friday’s PCE report will then offer a first look at broad consumer behavior in April after the pulling forward of spending in Q1 before the touted reciprocal tariffs.
• Control group retail sales disappointed in April at a nominal -0.2% M/M (cons 0.3) after 0.5% M/M in March.
• Consumer sentiment indicators have been particularly weak in recent months but it hasn’t translated to hard data to date (there has “not been a strong like at all” in Powell’s words). Powell did however offer a dovish caveat that “we haven’t had a move of this speed and size [in consumer sentiment]. So it wouldn’t be the case that we are looking at this and just completely dismissing. But it’s another reason to wait and see.”
• Another month without meaningful weakness in hard data would likely further bolster the FOMC’s belief that there isn’t a rush to cut rates.
• On the inflation side, CPI and PPI details point to subdued core PCE inflation, with unrounded estimates averaging 0.13% M/M in April. It follows what is currently just 0.03% M/M in March but which is likely to be revised solidly higher.