US TSYS: Modestly Lower, Flash PMIs Headline Docket
- Treasuries have seen a particularly contained reaction to US weekend strikes on Iran nuclear facilities, comfortably within Friday’s ranges across benchmark tenors.
- WTI August futures have given back most of what was almost a 6% increase in Asia trading (currently +0.7% on the day) as markets question the feasibility of Iran’s threat of shutting the Strait of Hormuz.
- Cash yields are 0.8-1.7bp higher across the curve.
- TYU5 trades at 110-28+ (-03) on typical volumes of 305k, off a high of 111-04 with the Asia open.
- Resistance continues to be monitored, seen at 111-13 (Jun 13 high) before 111-14+ (Jun 5 high & 61.8% retrace of May 1-22 downleg). Support is seen at 110-10+ (Jun 16 low).
- Today sees data focus likely on the flash PMIs although existing home sales could see greater sensitivity than usual after various weak housing releases recently.
- Data: S&P Global US flash PMIs Jun (0945ET), Existing home sales May (1000ET)
- Fedspeak: VC Supervision Bowman on mon pol and banking (1000ET), Goolsbee moderated discussion (1310ET), Kugler welcoming remarks (1430ET) – see STIR bullet
- Bill issuance: US Tsy $76B 13W, $68B 26W bill auctions
- Trump meets with the National Security Team at 1300ET – closed press (per Roll Call)
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Historical bullets
JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
