FED: Powell (Text Likely 0830ET) Leads A Heavy Fedspeak Line-Up
Jun-24 10:21
- Today sees a heavy Fedspeak schedule headlined by Fed Chair Powell’s House appearance, with text likely to be released at 0830ET judging by historical precedent before the appearance at 1000ET.
- Coming so soon after Wednesday’s FOMC press conference, we’d expect a repeat of him being far from emphatic about the prospect of rate cuts, all but taking a cut at the July meeting off the table.
- From the July presser: “As long as the economy is solid, as long as we're seeing the kind of labor market that we have and reasonably decent growth, and inflation moving down, we feel like the right thing to do is to be where we are, where our policy stance is, and learn more. And in particular we feel like we're going to learn a great deal more over the summer on tariffs."
- With repeated attacks from President Trump including calls for rates to be materially lower, expect a partisan approach to questions. Trump on Truth Social overnight: “I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come. THE BOARD SHOULD ACTIVATE.”
- Broader Fedspeak will also be important considering the dot plot revealed a particularly divided FOMC with seven pencilling in zero cuts this year through to two looking for three cuts.
- VC for Supervision Bowman (voter) surprised yesterday with an abrupt chance in stance, eyeing a July cut if “inflation pressures remain contained”. That echoed a dovish Waller on Friday kickstarting post-FOMC Fedspeak.
- A July cut isn't universally expected on the FOMC: Bostic (non-voter) told Reuters there is no rush to cut rates and that he still sees a single rate cut last this year; Barkin (non-voter) sees no rush to cut rates, whilst Daly (non-voter) thinks the Fed but can’t wait so long before fundamentals necessitate cuts but is looking more to the fall.
- Today sees more speakers with voting roles for 2025 - Hammack, Williams, Collins and Schmid are all likely to have monetary policy relevant content:
- 0830ET/1000ET – Powell Semiannual Policy Testimony
- 0915ET – Cleveland Fed’s Hammack (’26) on monetary policy (text + Q&A)
- 1230ET – NY Fed’s Williams (voter) keynote remarks (text + Q&A)
- 1345ET – Minneapolis Fed’s Kashkari (’26) in town hall (Q&A only)
- 1400ET – Boston Fed’s Collins (’25) on housing (text only)
- 1600ET – Gov. Barr (voter) welcoming remarks
- 2015ET – KC Fed’s Schmid (’25) speaks on economic outlook (text + Q&A)
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JGB TECHS: (M5) Rallies off Lows
May-23 22:45
- 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
May-23 20:54
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
May-23 20:35
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".
