OIL PRODUCTS: Repsol’s Bilbao Refinery Restarting Units After Maintenance

Politico reports that the White House is expected to send a “small package” of DOGE cuts for Congress to codify as soon as next week. See previous bullet: US: Johnson Promises To Codify DOGE Cuts After Musk Pans "Big Beautiful Bill"

• The package of cuts, known as rescissions, could test the water for a larger package of spending cuts down the line as the White House and Republican leadership in Congress look to get fiscal hawks on board with the ‘One Big Beautiful’ tax and spending bill that passed the House last week.
• Politico reports that “two Republicans" said the package "will target NPR and PBS, as well as foreign aid agencies that have already been gutted by President Donald Trump’s administration.”
• While the package would only target a tiny fraction of the discretionary spending reductions required to offset the deficit spending in the GOP megabill, it could assist in getting Elon Musk and Senate deficit hawks onside.
• It is also unclear if any rescissions package could pass Congress, as institutionally minded Republicans might view the action as further degrading Congress’s constitutionally mandated power over the federal government’s purse strings.
• President Donald Trump’s policy advisor, Stephen Miller, pointed out on X yesterday that DOGE cuts cannot be legislated via the reconciliation process. They must be addressed via a standalone rescissions bill or the annual appropriations process. 

Treasury sells $70B of 5-year note (CUSIP: 91282CNG2) at today's 1300ET auction.

• The current when-issued yield of 4.07% (up 4.3bp today) would mark an uptick from the April auction's 3.995% high yield.
• The last auction in April was solid, with a 1bp trade-through, and periphery statistics in line with what have been largely good auctions of 5Ys since late last year (in the past 6 auctions since October 2024, 5 have traded-through).
• However 5s are trading a little richer since then from a relative value perspective , at -11.6bp on the 2s5s7s butterfly (vs -5bp on April 23), currently plumbing the richest levels of the year on that front. They've richened on 2s5s as well (-6bp to 8.2bp). And curves further along are steeper too, with 5s10s +6bp at 41.6bp and 5s30s +13bp at 92bp.
• The 5-auction average statistics are in the table below - outside of March's weak auction (including 0.5bp tail), these sales have typically been consistently solid.

Latest U5 flow:

• ERU5 98.1875/98.0625 1x2 put spread, bought for 1.5 in 6k
• ERU5 98.0625/97.9375 1x2 put spread, bought for 2 in 10k