US: Parliamentarian Strikes Health Provisions From OBBB, Major Setback For GOP
Jun-26 12:51
The Senate Parliamentarian, Elizabeth MacDonough, has just ruled that a raft of health proposals from the Senate Finance Committee are not compliant with Budget Reconciliation and must be struck from the GOP’s One Big Beautiful Bill.
- According to a press release from Senate Budget Democrats, non-compliant items include the framework for a provider tax crackdown – the source of a major Senate GOP rebellion; limiting federal funding for states that permit undocumented migrants to access Medicaid; and additional limits on Medicaid, Medicare & ACA premium tax credits for non- citizens.
- Senate Majority Leader John Thune (R-SD) intends to hold the first procedural votes in the Senate on Friday. Thune will be boosted by President Trump, who will hold an event at the White House at 16:00 ET 21:00 BST to whip GOP Senators on the bill.
- The breadth of MacDonough’s rulings gives Thune several options: He could direct Finance to re-write non-compliant sections of the text, he could remove sections from the final package, or he could ignore the Parliamentarian’s guidance – a move that he has previously opposed and would effectively blow up the Senate filibuster.
- Senator Josh Hawley (R-MO) indicated on X that Trump told him yesterday he supports the more moderate House language on the provider tax, signalling that the Senate might accept a compromise deal.
- The Byrd Bath on the Finance Committee text is still ongoing with no determination yet on whether the GOP can use 'current policy baseline' to zero out the cost of extending the 2017 TCJA - arguably the most consequential decision for the bill. The NYT has a running tally here.
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SOFR: Looking for Unchanged Rates via Options
May-27 12:47
Looking for Unchanged Rates into Year end:
- SFRU5 95.87/95.75ps 1x2, with 95.93/95.75ps 1x2, bought the strip for 3.25 in 5k.
FOREX: US Election Related Highs Continue to Cap NZDUSD Topside, RBNZ Awaited
May-27 12:46
- NZD sits among the worst performers in G10 on Tuesday, shrugging off the more optimistic tone for global equities and taking its cues from the broader dollar rebound. Today’s 0.65% selloff has seen NZDUSD gravitate back below 0.6000 handle, as a cluster of US election related highs between 0.6025/38 continue to cap the topside for the pair.
- 0.6038 also represents the 61.8% Fibo retracement of the Sep’24-Apr’25 selloff. A break above here would signal scope for a stronger move towards the 76.4% at 0.6168. On the downside, the 50-day EMA has yet to be tested following the sharp break above on April 10. This average intersects at 0.5873 and will be firm support ahead of the RBNZ decision overnight.
- The RBNZ decision will take focus overnight, where rates are widely expected to be cut 25bp to 3.25%. Given heightened uncertainty, the MPC is likely to retain its easing bias again stating it has “scope” to cut rates further if required and its updated OCR path will garner attention. A downward revision bringing the terminal to below 3%, estimated 'neutral', would signal the potential need for greater accommodation.
- Our full preview with analyst views is here.
US TSYS: Minor Moves On Hassett And Then Durable Goods
May-27 12:38
- Treasuries have ticked a little higher on the preliminary April durable goods report, with overall orders not quite as weak as expected but core orders more notable as they surprisingly slipped -1.3% M/M (cons -0.1%) with only a partial offset from an upward revised 0.3% (initial 0.1%).
- TYM5 at 110-08 is back around where it was before it nudged 1-2 ticks lower shortly before the durables release to ~110-06 on NEC’s Hassett saying there could be more trade deals announced this week and that tariffs could go to 10% or less for some countries with good offers.
- Cash yields are 0.6-6.3bp lower on the day, with 30s leading the declines on the previously discussed potential Japan MoF bond issuance composition tweaks.
