UK FISCAL: Times reports GBP5bln welfare cuts announced last week aren't GBP5bln
- As we noted above, The Times has reported that the GBP5bln of welfare cuts announced last week by the government have been assessed by the OBR to only save GBP3.4bln.
- As a consequence it states that Chancellor Reeves will announce further welfare cuts in the Spring Statement today, alongside other larger departmental cuts.
- This brings up some interesting questions. First, there were two full rounds of forecasts that the OBR produced that included all of the measures the government proposed that were sent to the Treasury on 10 March and 21 March. So why did the Treasury not wait for the OBR's costings before putting a figure on the savings when they were this close? Does that mean that these cuts were basically rushed through at the last minute and they didn't run them past the OBR first? Why not just wait for the Spring Statement?
- We suspect that this was to try and get the main bad news out of the way - but we are not sure that this has really helped in this situation. Possibly with the mainstream media the focus will be the total cuts aren't as bad as some had expected, but we don't think this will fool markets.
- The additional measures are expected to be incapacity benefits frozen to 2030 rather than raised in line with inflation (which will be hugely unpopular amongst the backbenchers) and a "small reduction" in the weekly universal credit payments in 2029.
- Other larger departmental cuts will likely not be fully detailed until the Spending Review on 11 June.
- Full Times article here.
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AUDUSD TECHS: Sights Are On The 100-DMA
- RES 4: 0.6471 High Dec 9 ‘24
- RES 3: 0.6429 High Dec 12 ‘24
- RES 2: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 1: 0.6409 High Feb 21
- PRICE: 0.6364 @ 08:11 GMT Feb 24
- SUP 1: 0.6314/6231 50-day EMA / Low Feb 10
- SUP 3: 0.6171/6088 Low Feb 4 / 3
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.6000 Round number support
A bullish condition in AUDUSD remains intact and last week’s gains reinforce the current bullish set-up. Sights are on key resistance at 0.6410/14 - the 100-dma and the 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg respectively. A clear break of both levels would set the scene for the next leg higher for the pair, making 0.6429 the next target, the Dec 12 ‘24 high. The 50-day EMA undercuts as support, crossing at 0.6314.
BONDS: US Treasuries and Gilt Roll pace
ROLL PACE: All the early volume in Gilt is spread related, pretty much 100% of the front Month Volume is related to the roll.
- Ultra 30: 30%.
- TBond: 31%.
- Ultra 10: 23%.
- TYA: 35%.
- FVA: 31%.
- TUA: 32%.
- Gilt: 20% (as of Friday).
EQUITY TECHS: E-MINI S&P: (H5) Corrective Pullback
- RES 4: 6205.38 0.764 proj of the Jan 13 - 24 - Feb 3 price swing
- RES 3: 6200.00 Round number resistance
- RES 2: 6178.75 High Dec 6 and key resistance
- RES 1: 6088.20/6166.50 20-day EMA / High Jan 24
- PRICE: 6054.25 @ 07:54 GMT Feb 24
- SUP 1: 6014.00 Low Feb 10
- SUP 2: 5935.50 Low Feb 3
- SUP 3: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
- SUP 4: 5842.50 Low Jan 14
S&P E-Minis faded sharply off their recent highs last week. The move down appears corrective - for now - and a bullish theme is intact. Attention is on the key resistance at 6178.75, the Dec 6 ‘24 high. A break of this hurdle would resume the primary longer-term uptrend. On the downside, initial key near-term support has been defined at 6014.00, the Feb 10 low. A breach would highlight a bearish development and expose 5935.50, the Feb 3 low.
