US TSYS: Modestly Lower Ahead of Bessent Briefing and Data
- Treasuries are mildly lower on the day after a late open for cash with a Japan holiday despite recent downward pressure in equity futures.
- The net move lower after yesterday’s sizeable bull steepening has been aided by the WSJ reporting after the close yesterday that Trump is expected to soften the impact of auto tariffs.
- Bessent at 0830ET in a White House briefing with Leavitt today drew some short-lived optimism on trade deal progress yesterday, and will be watched today.
- Data will also be important, including trade, JOLTS and consumer confidence, along with earnings (including Booking, Snap, Starbucks, Visa after the close) and Trump headlines.
- Cash yields are 1-2bp higher across the curve, consolidating yesterday’s bull steepening with 2s10s for example at 52bps.
- TYM5 trades at 111-25+ (-04+) on particularly low volumes of 215k although the Japan holiday will have impacted at the margin.
- It has pulled back off yesterday’s high of 111-31 having cleared resistance at 111-25 (50% retrace of Apr 7-11 bear leg). This undermines a recent bearish theme, opening the round 112-00 before 112-12 (61.8% retrace of Apr 7-11 bear leg).
- Data: Advance goods trade balance Mar (0830ET), Wholesale/retail inventories Mar P/Mar (0830ET), FHFA/S&P CoreLogic House prices Feb (0900ET), JOLTS Mar (1000ET), Conf. Board consumer survey Apr (1000ET), Dallas Fed services Apr (1030ET)
- Bill issuance: US Tsy $70B 6W bill auction (1130ET)
- In case missed yesterday, Treasury's latest borrowing estimates were slightly higher than MNI's estimates, at $514B for the Apr-Jun quarter and $554B for the Jul-Sep quarter (MNI had pencilled in $500B for each quarter). There may have been some disappointment given Treasury did not lower the quarter-end TGA cash targets, which had been expected by some, but the current quarter's borrowing requirements are - excluding the effect of TGA cash rebuild - actually $53B lower than estimated at the last refunding in February. It could tilt the balance on Wednesday’s full QRA to no change in guidance on nominal coupon sizes being unchanged for “at least the next several quarters”, a positive development for Treasuries.
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USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4292 @ 16:50 GMT Mar 28
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD traded through support at 1.4242 on Wednesday but has recovered. A return lower and clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance is 1.4402, the Mar 20 high.
US FISCAL: Debt Limit "Extraordinary Measures" Pick Up, But Cash Dipping Pre-Tax
Treasury data shows that there were $207B of "extraordinary measures" available to circumvent hitting the debt limit as of Wednesday Mar 26.
- That's the most since Jan 27th and up from $163B a week earlier, from a total $376B available.
- However, Treasury cash in the TGA fell to $316B as of the 26th (and was down to $280B on Thursday), meaning there were a combined $523B of resources available to avert the debt limit, the lowest since the impasse began in January (and half of the starting amount of just over $1T).
- The next couple of weeks will be very important for Treasury, as they represent the biggest tax take of the year. The Congressional Budget Office reported this week that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." Treasury wrote to Congress this month that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
AUDUSD TECHS: Remains Above Support
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6291 @ 16:46 GMT Mar 28
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD is unchanged. A short-term bull theme is intact and the latest move down appears corrective. Key short-term support to watch is 0.6187, the Mar 4 low. Clearance of this level would reinstate a bear threat. First support is at 0.6258, the Mar 21 low. A stronger recovery would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen the bull cycle and resume the uptrend that started Feb 3.
