TARIFFS: Lutnick-Digital Services, Metals To Be On Table In Further EU Talks
US Commerce Secretary Howard Lutnick, speaking to CNBC, talks on trade but offers little in the way of signals on the prospect of an agreement with China (talks currently taking place in Stockholm) or more details on the EU agreement.
- Regarding EU trade, in the wake of the deal announced over the weekend, Lutnick says he expects talks to continue. Says digital services as well as steel and aluminium will be on the table. Says that President Donald Trump "accepts that natural resources won't face tariffs".
- Reminder that the second day of talks between US and Chinese delegations, led by Treasury Sec Scott Bessent and Vice Premier He Lifeng respectively, are underway in Stockholm, Sweden. A full breakthrough is not expected, but another 90-day pause beyond 12 August is seen as a likely outcome to avoid a major escalation in tariffs.
- On a deal with India, Lutnick says, "Trump decides if he wants to do a deal or not." He reiterates that "We're going to have things done by Friday [1 August]." India's CNBC TV18 reports that a US team is set to visit New Delhi on 25 August for the sixth round of talks on a bilateral trade agreement, with the aim of having an interim deal in place by 1 Aug. CNBC TV18: "Both sides are aiming to wrap up the first tranche of the BTA by September-October, with key issues, including tariff relief on steel, aluminium, autos, and duty concessions for labour-intensive Indian exports, on the agenda."
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
