AUSSIE BONDS: Richer, Narrow Ranges, May CPI Tomorrow
ACGBs (YM +4.0 & XM +5.5) are trading stronger, but ranges have been relatively narrow on a data-light day.
- "Oil extended declines and US futures gained after Donald Trump said that Israel and Iran had agreed to a tentative ceasefire. Iran's foreign minister said no agreement has been made but that it would halt fighting if Israel stops." (BBG)
- Cash US tsys are ~1bp richer in today's Asia-Pac session. Today’s US calendar: Philadelphia Fed Non-Man Activity, Current Account Balance, FHFA House Price Index.
- Cash ACGBs are 4-6bps richer with the AU-US 10-year yield differential at -18bps.
- May CPI data is due tomorrow. Consensus expects it to ease to 2.3% y/y from 2.4%. Trimmed mean ticked up to 2.8% y/y in April and has been around 2.7-2.8% since December, suggesting a stalling in disinflation. The next RBA meeting is July 7-8.
- The bills strip is flat to +4, with late whites/early reds outperforming.
- RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in July is given an 85% probability, with a cumulative 76bps of easing priced by year-end.
- The AOFM plans to sell A$1000mn of the 3.50% 21 December 2034 bond tomorrow.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
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".
