US TSYS: Near Highs After Fed Held Rates Steady, Remain Patient

• RES 4: 1.4452/4543 High Mar 13 / 4 and a bull trigger
• RES 3: 1.4415 High Apr 1 
• RES 2: 1.4304 50-day EMA 
• RES 1: 1.4296 Intraday high 
• PRICE: 1.4225 @ 16:58 BST Apr 7
• SUP 1: 1.4028 Low Apr 3
• SUP 2: 1.3986 Low Dec 2 ‘24  
• SUP 3: 1.3944 61.8% retracement of Sep 25 ‘24 - Feb 3 bull run
• SUP 4: 1.3894 Low Nov 11 ‘24 

USDCAD has recovered from last week’s low. For now, the move higher appears corrective. The sell-off last week confirmed a clear reversal of the bull cycle between Sep 25 ‘24 and Feb 3. Price has traded through a key support at 1.4151, the Feb 14 low, and this signals scope for an extension towards 1.3944, a Fibonacci retracement. On the upside, key short-term resistance is seen at 1.4304, the 50-day EMA. 

• Consumer credit surprisingly fell by $0.8bn in February vs expectations of a $15bn increase.
• It also followed sizeable downward revisions, with $8.9bn in Jan ($18.1bn initially) and $27.1bn in Dec ($37.1bn) although there was an upward revision to -$5.6bn ($14.0bn) back in November.
• Credit growth therefore essentially paused in February (and in both revolving, +0.1bn, and non-revolving, -$0.9bn alike) in the first month under limited tariff announcements (10% tariff on China announced Feb 1, 25% tariffs on steel & aluminum to come Mar 12 and floating idea of reciprocal tariffs).
• The sudden pullback in credit growth is surprising considering surveys such as today’s Dallas Fed’s banking survey taken Mar 24 – Apr 2, which showed a notable moderation in loan demand but to levels that were still stronger than much of 2023-2024.
• However, the credit impulse on a 3mth vs 3mths a year ago basis is still mildly positive after the very strong $27.1bn increase in credit the month after the presidential election despite the above downward revisions. It has however waned from a brief positive boost seen in late 2024 - see charts. 

• Treasuries look to finish weaker, low end of very wide range (TYM5 111-15.5 low vs. 114-10 overnight high) as markets started to anticipate easing impact from last week's sweeping tariff announcement as more countries look to negotiate or at least respond to the Trump administrations trade policy.
• Heavy volumes (TYM5 over 5.3M after the bell) trades -13.5 at 112-02, curves steper: 2s10s +7.370 at 40.989 (32.805 low vs. 45.006 high), 5s30s +4.087 at 74.100.
• Sharp risk-off tone early overnight buoyed Tsys (10Y yield tapped 3.8693% low before bouncing to 4.2122% during morning trade) as stocks gapped lower on the open. Focus squarely on US tariffs and foreign countries response - rates gapped lower midmorning but quickly rebounded after erroneous headline of 90 day tariff delay made the rounds.
• Bbg reported that “Trump administration officials are debating the merits of creating a new exporter tax credit, a move that offers an implicit acknowledgment of the harm that the White House’s tariff policies risk inflicting on US companies.”
• Dearth of economic data today and tomorrow, focus on Wednesday's March FOMC minutes, CPI data on Thursday and PPI on Friday.