AMERICAS OIL: Hedge Fund Managers Boost Net Bullish Nymex Gasoline Bets

A few notes from Treasury Secretary Bessent's 5+ hour hearing at the House Ways and Means Committee Wednesday:

• Bessent suggested that the US could extend the pause on reciprocal tariffs beyond the July 9 deadline to reach an agreement - "It is highly likely that those countries or trading blocs in the case of the E.U., who are negotiating in good faith, we will roll the date forward to continue good faith negotiations".
• Bessent said the current fiscal year deficit would be between 6.5-6.7% of GDP (which as MNI noted earlier is where the deficit is tracking through the first 8 months of the fiscal year to May).
• Regarding his previously stated goal of achieving a 3% of GDP deficit, he told the committee that he wanted to get it under 4% by the end of Trump's term. "I said that we would like to have a three in front of the deficit to GDP by 2028 the end of President Trump's term, which is the long term average."
• He wouldn't be drawn on an x-date estimate in response to a question, saying that estimate sare "imprecise", identifying mid-to-late summer as the most likely timing. He told Congress on May 9 that there was a "reasonable probability" that the x-date could be reached in August.
• Outside of the usual political wrangling on the deficit impact of the fiscal legislation going through Congress, there was little on actual Treasury issuance. When asked about potential novel approaches to Treasury instrument issuance, including bonds with an "equity interest" in cash receipts, Bessent said he was open to ideas but "right now, we are committed to the fulsome the regular cadence of treasury issuance as it is."
• Bessent indicated that he'd like to remain Treasury Secretary until 2029 - of note given reports and market speculation that he could be named Powell's successor as Fed Chair in the near future.

• RES 4: 0.6603 High Nov 11 ‘24  
• RES 3: 0.6582 High Nov 12 ‘24
• RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 1: 0.6546 High June 11
• PRICE: 0.6517 @ 16:34 BST Jun 11
• SUP 1: 0.6464/6413 20- and 50-day EMA values 
• SUP 2: 0.6357 Low May 12    
• SUP 3: 0.6275 Low Apr 14 
• SUP 4: 0.6181 Low Apr 11 

The trend needle in AUDUSD continues to point north, affirmed by the pair printing a new YTD high at 0.6546 in the wake of the US CPI print. Key support lies at 0.6413, the 50-day EMA. A clear break of this average is required to highlight a potential short-term reversal. The pair has recently cleared a key short-term resistance at 0.6515, the May 7 high, confirming a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement.  

SOFR & Treasury options turned mixed in the second half. SOFR puts two-way while Treasury options focused on upside call skew as underlying futures extended highs and projected rate cut pricing gained vs. morning levels (*) as follows: Jun'25 steady at 0.0bp, Jul'25 at -4.6bp (-3.6bp), Sep'25 at -19.9bp (-16.6bp), Oct'25 at -33.1bp (-28.1bp), Dec'25 at -49.3bp (-43.1bp).

• SOFR Options:
  • -2,500 2QZ5 96.50 straddles, 59.5 ref 96.495
  • 10,000 SFRU5 95.62 puts, 0.75 vs. 95.865/0.05%
  • 8,000 SFRN5 95.68/95.81/95.93 put flys, 5.0 ref 95.88
  • +5,000 SFRQ5 95.62/95.75 put spds 1.62 over SFRN5 95.75 puts
  • -6,000 SFRN5 95.75 puts, 1.0
  • +4,000 SFRU5 95.50 puts, 0.5 ref 95.84
  • -3,000 2QH5 96.37 straddles 72.5 ref 96.37
  • -2,500 SFRZ5 95.25/95.50/95.75 put flys, 3.5 ref 96.07
  • +4,000 SFRZ5 97.00 calls, 6.0 ref 96.06
  • *5,000 SFRU5 95.50 puts, 0.5 ref 95.845
  • 1,700 SFRU5 95.75/95.81 2x1 put spds
  • 2,000 SFRU5 95.81/95.93/96.06 call flys
  • 3,000 SFRN5 95.37/95.62/95.75 broken put flys
  • 2,000 SFRZ5 95.56/95.68/95.81 put flys ref 96.08
  • 3,400 SFRU5 95.75 puts ref 95.85
  • 1,500 SFRQ5 95.81 puts, ref 95.845
• Treasury Options:
  • +30,000 TYQ5 109/112 call over risk reversals, 1 net vs. 110-15.5/0.50%
  • -22,500 FVU5 105.5 puts, 6 ref 107-28.5/0.10%
  • 2,400 TYN5 109/109.5/110 3x2x2 put trees re 110-16.5
  • +10,000 wk1 FV 109/110 call spds, 5
  • 5,000 TYQ 112 calls 23 ref 110-17.5, 5.84% appr implied vol
  • 1,500 TYN5 109.52/109.75 put spds
  • *2,000 TYN5 113/113.5 call spds ref 110-04.5
  • over 10,000 FVN5 107.5 puts, 14-15 ref 107-20.5
  • near 5,000 FVN5 107.5/108 strangles
  • +3,000 wk2 US 111 puts, 6-7 ref 112-14 to -17
  • Block, 8,000 TYN5 112 calls, 2 ref 110-06.5
  • 2,000 Mon wkly TY 110 puts ref 110-07.5