HYBRIDS: Tennet Perps (TENN: Sub Baa3/BB-) Relative Value

Treasury has $163B of "extraordinary measures" remaining for authorities to use to fend off hitting the debt limit as of March 19, per the latest release of Treasury data. That's up from $86B on Mar 17 and a low of $34B on Feb 24.

• That's a little under half of the $377B in measures available to Treasury, with most of the amount remaining ($143B) coming from the so-called "G Fund".
• This headroom is in addition to $416B in cash left in the TGA, at last count.
• We haven't seen any changes recently to "x-dates" by when Treasury will run out of cash until the debt limit is lifted.
• Consensus still centers around late July/early August, but much will depend on April's major mid-month tax take. Treasury wrote to Congress last week that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.

• RES 4: 1.4793 High Feb 3 and key resistance
• RES 3: 1.4700 Round number resistance 
• RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg 
• RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger  
• PRICE: 1.4345 @ 16:27 GMT Mar 21
• SUP 1: 1.4242 Low Mar 6 and a key near-term support   
• SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
• SUP 3: 1.4011 Low Dec 5 ‘24
• SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle

USDCAD is trading closer to its recent lows. The bull cycle that started Feb 14 remains intact and moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Note that the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.   

The Q4 current account deficit reported this week was much smaller than expected at $303.9B ($330B consensus), unexpectedly narrowing from $310.3B in Q3.

• This came despite a widening of the net trade deficit to $250B (widest since Q2 2022), from $236B prior as the goods deficit jumped $17B on the quarter to $326B.
• Offsetting this however were a pickup in primary income (positive $2.3B, after two consecutive negative quarters) as reinvested earnings soared $38B to $42B, the highest in 4 quarters (which appears to account for most of the consensus miss, though offset by a $20B pullback in dividends/withdrawals). There was also a $3B increase in the services surplus and a $4B decline in the secondary income deficit.
• The Q4 current account shortfall came to 4.1% of GDP, slightly smaller than Q3's 4.2% - but still above the sub-4% levels for the preceding 8 quarters.
• Obviously trade is a sensitive topic in policy circles at present, and bump in the primary income account (which looks like a one-off) doesn't obscure the very large sustained trade deficit which looks to have expanded substantially in Q1 even if that's on the back of idiosyncratic factors such as gold imports/tariff front-running.
• January's goods and services trade deficit was $131.4B, representing a material jump from December's $98.1B and by far the largest monthly print in history. Next week we get February advance goods trade data - more in a separate note ("US OUTLOOK/OPINION: Macro Week Ahead: PCE Plus A Rare Flagging Of Trade Data").