CZK: Koruna Barely Changed, CNB Gov Guides Towards Stable Rates

• In the equity space, a bullish trend condition in the S&P E-Minis contract remains intact and today’s strong start to this week’s session reinforces bullish conditions. The contract has pierced an important resistance at 5837.25, the Mar 25 high and a bull trigger. This strengthens the current bullish theme, paving the way for a continuation near-term. Sights are on 5896.25, 76.4% retracement of the Feb 19 - Apr 7 bear leg. Initial firm support to watch lies at 5628.71, the 50-day EMA.
• Strong gains in the EUROSTOXX 50 futures contract today reinforce current bullish conditions. The contract is extending the recent breach of 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg. The continuation higher signals scope for a climb towards 5516.00, the Mar 3 high and the key bull trigger. Initial support to watch lies at 5127.08, the 20-day EMA. Clearance of this level would signal a possible reversal.

Continued: The CRFB estimate highlights the maths problem facing House Speaker Mike Johnson (R-LA) as the budget resolution passed by Congress in April only provides for $4.5 trillion in spending. Ways and Means is expected to release their full tax bill today. If the text doesn’t include offsets, the GOP may be forced to pursue a budget gimmick championed by Thune and Bessent that would cost extending the TCJA at zero dollars. 

• That strategy is untested and has been criticised by Democrats and Republican fiscal hawks for obscuring deficit spending. It is also unclear if the manoeuvre will run afoul of the non-partisan Senate Parliamentarian, who must determine if the package conforms with reconciliation. If Thune overrules the Parliamentarian, it could have long-term consequences for the Senate filibuster.
• Looking ahead, the House Energy and Commerce Committee is scheduled to meet tomorrow for a marathon markup. The panel must find $880 billion in savings from its budget, whilst preserving enough of Medicaid to avoid a moderate revolt.
• E&C Chair Brett Guthrie (R-KY) unveiled a draft bill yesterday that seeks to strike a balance between conservative and moderate priorities, but Politico notes, “it could still lead to millions losing Medicaid coverage”, foregrounding one of the biggest political issues of the Congress.
• The House Agriculture Committee will also meet tomorrow to mark up their bill, looking for $200 billion+ in savings from another safety net programme - SNAP.
• If all goes to plan, the House Budget Committee will assemble the final bill on Friday. 

Treasury Secretary Scott Bessent has urged Congress to increase or suspend the debt limit by mid-July as he believes there is a “reasonable probability” that the government will exhaust extraordinary measures to stave off a default during the Congressional recess in August.

• As Republican leaders intend to address the debt limit as part of their ‘Big Beautiful’ reconciliation bill, the letter puts a hard deadline on the legislation that Senate Majority Leader John Thune (R-SD) hopes to pass by July 4.
• On May 9, House Ways and Means Committee Chair Jason Smith (R-MO) released a draft framework for the tax portion of the package, ahead of a markup tomorrow.
• The draft document does not include text on Trump’s pledges to end federal taxation on tipped earnings and social security payments, or tax credits for auto loans and domestic manufacturing.
• Notably, the 28-page Ways and Means document fails to include language to raise the cap on State and Local Tax (SALT) deductions – a major political issue for blue state Republicans. It also keeps the top rate of tax at 37% rather than 39.6%, appearing to drop a 'millionaire tax' tentatively endorsed by President Donald Trump as a revenue source.
• The Committee for a Responsible Federal Budget noted in a May 10  “preliminary” estimate that the bill “would add $5 trillion to primary deficits through 2034 as written, and over $5.5 trillion to primary deficits if made permanent.”