US FISCAL: Tsy Sec Bessent: Eyeing <4% Deficit, Staying In Office Until 2029

A slightly larger-than-expected fiscal surplus in April of $258.4B ($256.0B survey, $209.5B prior year) provides some evidence that the fiscal trajectory isn't quite as worrisome as it appeared earlier in the year, but overall deficits remain wide.

• The $1.05T deficit through the first 7 months of the 2025 fiscal year (October to September) is nearly $200B higher than at the same point of the previous FY, though as usual a sizeable April tax take helped pare the cumulative shortfall.
• Total revenue rose $74B vs April 2024, to $850B, with expenditure up $25B to $591B. The April 15 tax deadline of course makes this the key month for revenue in the fiscal year.
• Despite the latest uptick in individual corporate ($+1.7B vs last year) and individual (+$55.1B) tax collection, if one assumes May-Sept budget balances are unchanged from last year's, the FY2025 deficit is on pace to come in around $2T, which would be above most estimates coming into the year.
• However, there is some sign that tariffs are contributing in a direct way to the smaller overall deficit: customs duties totaled $15.6B in April, easily an all-time record for a single month and up from $6.4B in April 2024. Indeed that's a pace not far from $200B on an annualized basis.

• RES 4: 0.5682 High Nov 12 ‘24  
• RES 3: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 2: 0.6528 High Nov 29 ‘24
• RES 1: 0.6515 High May 7 
• PRICE: 0.6374 @ 15:58 BST May 12
• SUP 1: 0.6371/6339 Intraday low / 50-day EMA   
• SUP 2: 0.6275 Low Apr 14    
• SUP 3: 0.6181 Low Apr 11
• SUP 4: 0.6116 Low Apr 10  

AUDUSD continues to trade below last Wednesday’s high. The trend condition is bullish and the latest move down is considered corrective. The recent breach of 0.6450, the Apr 29 high, confirmed a resumption of the uptrend. Note that moving average studies remain in a bull-mode position, highlighting an uptrend. A resumption of the trend would open 0.6528, the Nov 29 ‘24 high. Key support to monitor is 0.6342, the 50-day EMA. 

Compared with the 29-page initial draft Ways and Means framework released last week, the near-400 page House Ways and Means Committee tax bill released today (link via Punchbowl News is here) has a few areas that will continue to be contentious in the days to come:

• Includes a State and Local Tax (SALT) deduction cap increase (to $30k), a major political issue for blue state Republicans (and it's unclear whether this deduction will be large enough for some of them who eyed a figure above $100k, therefore putting this bill in jeopardy of not passing in the House in its current form).
• Includes - per some of Pres Trump's key campaign pledges - a tax break on tips, as well as on car loans, and provides a higher standard deduction for seniors (a way of giving Social Security recipients a tax cut, but falling short of Trump's promise of eliminating taxes on Social Security). But as with the draft release, the text still doesn't include language on a "Millionaire" tax bracket (keeping the top marginal bracket at 37%).
• The bill raises the debt limit by $4T as expected, but that's smaller than the $5T eyed by Senate Republicans.
• Markup of the bill is scheduled to start Tuesday at 2:30pm ET - House Speaker Johnson has aimed to get the chamber to pass the bill by Memorial Day weekend later this month.