US STOCKS: Open In Asia Under Pressure
The ESU5 Friday night range was 6003.25 - 6071.00, Asia is currently trading around 5993. The market has gapped lower on the Asian open but no real follow through as yet as investors digest the implications of the weekend's bombing. ESU5 -0.41%, NQU5 -0.52%. In the short-term this should provide headwinds for US Equity and add to already mounting pressures for the week as month-end approaches.
- The ESU5 looks to be building a rounded top, indicating a potential retracement is possible. First support is the 5800 area, a break back above 6100 is needed to see the upward momentum reignited.
- (BBG) - “Apple executives discussed acquiring startup Perplexity AI, which was valued at $14 billion in its most recent funding round, people familiar said. A deal would help Apple develop its own AI-based search engine, swapping out Google as its default browser.”
- The market has been burned by being underweight US Equities and has been forced back in over the last few weeks. Investors will be focusing on how long the US plans to be involved and if the conflict will become extended. The market is hesitant to sell again but the headwinds are building.
- Share buybacks are now in their blackout period, will the absence of this large underlying bid reportedly around $40 billion a week, allow for some sort of a retracement.
- This together with what looks to be some large month-end rebalancing should provide some decent headwinds for US Equities in the short-term. This added to the Geopolitical picture points to a market that might trade heavy for the week.
Fig 1: SPX Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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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".
