MACRO OUTLOOK: Potential Upward Revisions To US Q1 GDP Growth
May-23 20:01
- The week’s data is backloaded, with the second GDP/PCE release for Q1 on Thursday before Friday’s PCE report for April.
- Real GDP growth ‘surprised’ with -0.3% annualized last month’s advance release for Q1, as whilst it appeared close to the -0.2% consensus, it was better than the -0.8% median from 26 analysts who had updated forecasts following March advance trade data just a day beforehand plus the Atlanta Fed’s GDPNow of -1.5%.
- Large swings in trade and inventories in Q1 on tariff front-running has made it harder to get a sense of underlying momentum in the economy. However, one notable finding in the advance release was that final private domestic purchases was robust at 3.0% annualized in Q1 after 2.95% in Q4 and an average 3.0% in 2024.
- It was helped by a surge in non-residential investment (9.8%, adding 1.3pp to GDP growth) plus consumption growth at a softer but still relatively healthy 1.8% vs an expected 1.2%. This of course was likely boosted by tariff front-running as well.
- Powell on the matter as this month’s FOMC press conference, including his expectation of upward revisions, with this week’s release offering a first look at these revisions: “So that could, in the second quarter, be reversed so that we have, you know, an unusually large [negative] contribution to—unusually positive. That’s very likely as imports drop sharply. You could also have—you know, very likely you’ll have restatements of the—of the first quarter. It’ll turn out that consumer spending was higher. It will turn out that inventories were higher. And so you’ll see—you’ll see those data revised up. It may actually go into the third quarter, too. And so I think it’s going—this whole process is going to, a little bit, make it harder to make a clean assessment of U.S. demand.”
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USDCAD TECHS: Corrective Bounce
Apr-23 20:00
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4165 50-day EMA
- RES 1: 1.3906/4029 High Apr 17 / 20-day EMA
- PRICE: 1.3871 @ 16:29 BST Apr 23
- SUP 1: 1.3781 Low Apr 21
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
A bearish theme in USDCAD remains intact for now despite Wednesday’s spot rally. Fresh cycle lows continue to highlight a resumption of the downtrend and signal scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear -mode position, highlighting a dominant downtrend. First resistance to watch is 1.4029, the 20-day EMA.
PIPELINE: Corporate Bond Roundup: $4B Walmart Leads Midweek Supply
Apr-23 19:42
$11.85B to Price Wednesday
- Date $MM Issuer (Priced *, Launch #)
- 04/23 $4B *Walmart $750M 2Y +22, $750M 2Y SOFR+43, $1B 5Y +37, $1.5B 10Y +52
- 04/23 $2.25B #QXO Inc. 7NC3 6.75%
- 04/23 $1.5B *OCP $750M 5Y +235, $750M +10Y +260
- 04/23 $1.25B *Rentokil Terminix $750M 5Y +115, $500M 10Y +135,
- 04/23 $1B *Jane Street 8NC3 6.75%
- 04/23 $750M *Bank of Peru 10.25NC5 6.5%
- 04/23 $700M *Guardian Life 5Y +80
- 04/23 $400M *Hanwa Futureproof 3Y +95
US TSYS: Late SOFR/Treasury Option Roundup
Apr-23 19:33
Decent SOFR & Treasury option flow on the day, leaning towards downside rate hedges and curve steepeners fading today's flattening. Underlying futures near late session lows as early sentiment over slashing China tariffs evaporated. Projected rate cuts continue to retreat from this morning's levels (*) as follows: May'25 at -2.1bp (-2.7bp), Jun'25 at -15.1bp (-17.7bp), Jul'25 at -33.6bp (-36.9bp), Sep'25 -51.6bp (-55.2bp).
- SOFR Options:
- -7,000 SFRM5 95.87 calls, 9.5
- +10,000 SFRK5 95.68/95.75 put spds, 0.75
- Block, -5,000 SFRZ5 96.62/97.12 call spds, 13.0 vs. 96.49/0.18%
- +20,000 0QM5/0QN5 97.00/97.25 call spd spd, 1.25 net/July over
- -10,000 SFRM5 95.75/95.93/96.18/96.37 call condors, 5.5 ref 95.89
- +4,000 0QU5 97.00/97.50 call spds 1.25 over 2QU5 96.87/97.37 call spds
- +10,000 SFRU5 95.25/95.75 put spds, 3.25 ref 96.245
- -4,000 SFRZ5 96.25/96.50/96.81 broken call flys, 1.0 ref 96.505
- 10,000 SFRU5 95.75/95.87/96.00 put trees, 0.5 ref 96.24
- Blocks, 12,000 0QM5 96.87/97.25 call spds, 10.5 ref 96.76
- 5,000 SFRM5 95.62 puts & 5,900 USM5 95.75 puts
- 3,000 SFRZ5 95.37/95.62 put spds ref 96.495
- 3,000 SFRM5 96.18 calls, 5.0 ref 95.88
- 3,300 SFRZ5 95.37/95.81 put spds ref 96.49
- Blocks, 6,700 SFRU5 95.25/95.75 put spds, 3.75
- 2,000 SFRK5 95.68/95.75 2x1 put spds ref 95.88
- 2,000 SFRM5 96.25/96.37 call spds ref 95.855
- 2,000 SFRK5 96.12/96.25 call spds vs. 95.75 puts ref 95.90
- Treasury Options:
- 6,500 TYM5 111 calls, 59, total volume over 33.5k
- 5,000 TYK5 110.5 puts, 7 ref 111-00.5
- 5,000 TYM5 111 puts, 54 ref 111-03 total volume over 26k
- +7,500 TYM5 111 straddles, 156
- 2,000 TYN5 109/114 strangles ref 111-10
- 1,058 FVM5 108.5/109.5/110.5 call flys ref 108-12
- +1,000 FVK5 108.25/108.5 strangles, 18.5 ref 108-11.75
- over 19,900 TYK5 111.5 calls
- over 14,400 TYM5 112 calls, 36 last
- over 10,500 TYM5 115.5 calls, 4 last
- over 3,600 USM5 117 calls, 108 last ref 115-10
- 1,600 TYK5 111/111.5 strangles ref 111-04
- 1,500 FVN5 107/108 put spds ref 108-09.75
- Block, 10,000 TYM5 112/115.5 call spds, 30 vs 111-01/0.28%
- 1,500 FVM5 109/110/110.5 broken call flys ref 108-06.5
- 1,500 TYK5 110.5/111.75 call spds ref 110-31.5
- 9,000 USM5 118/120 call spds, 18 ref 114-14
- 3,600 TYK5 111.5 calls, 6 ref 110-28.5
