NEW ZEALAND: Milk Prices Rise At Auction For The First Time Since May
Overnight the fortnightly whole milk powder auction saw prices rise 1.7% versus the previous auction result, per GDT. This put prices back to $3928, from $3859 prior. It was the first rise since early May for the auction outcome. The chart below overlays the auction price result versus NZ's Citi terms of trade proxy.
- The ToT proxy hasn't shown much downside momentum, even as dairy prices moved off 2025 cycle highs. The ToT proxy is at highs back to 2022.
- Bloomberg noted: "The GDT price index change, which is a weighted average of the percentage changes in individual milk products between trading events, was an increase of 1.1%"
Fig 1: GDT Average Whole Milk Powder Auction Price & Citi NZ ToT Proxy
Source: Bloomberg Finance L.P./Citi/MNI
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ASIA: Coming Up In Asia Pac Markets On Monday
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| 0001BST | 0701HKT | 0901AEST | UK June Rightmove House Prices |
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US FISCAL: Available Extraordinary Measures Pick Up Ahead Of Tax Date
Treasury had $144B in "extraordinary measures" available to keep the government financed as of June 11 per a release Friday. That is up from $84B a week earlier and the highest since April 28.
- However, TGA cash continues to fall, to $309B latest (lowest since early April) Combined with a pullback in Treasury cash ($376B), keeping the total resources available to avert an "x-date" in the summer at around $450B .
- There will be another uptick in Treasury cash in the coming days, and it's likely Treasury allowed some of the extraordinary measures to be rebuilt (ie not exercised) in anticipation of more cash coming in.
- This is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.
FED: Two Cuts Priced This Year Headed Into FOMC Week
As we head into the June Fed meeting week, market pricing is reflective of the FOMC’s messaging (that we describe in our preview):
- The next cut is only fully priced by the October FOMC meeting, with September seeing a roughly 80% implied probability of bringing the next 25bp reduction.
- Exactly 50bp of cuts are priced through end-2025, implying two Q4 cuts.
- That’s a shift from just after the May meeting, after which the next cut was fully priced by September, and there were closer to three cuts priced for the rest of the year.
- Overall cuts are seen backloaded this year (after 15bp in September, 29bp of cuts priced in Q4 - Oct/Dec combined), but falls off in Q1 (just 21bp cuts priced, 9bp of cuts priced for January and 12bp for March)
