US TSY FUTURES: TU/TY Flattener Blocked

• Despite the quick 40pip move lower for USDJPY, the pair has subsequently recovered and holds steady above the 159 mark in latest trade. There appears to be a coordinated effort between US and Japan officials at the G7 summit to revive the FX rhetoric, and the market still appears highly sensitive to these types of headlines.
• As a reminder, USDJPY remains in a tug of war between whether the recent precedent from Japanese authorities has the power to counter the fundamental headwinds for the yen. The domestic pressure surrounding a planned extra budget and the associated moves in long-end JGB yields provides another notable headwind for the yen.
• Last week’s USDJPY recovery resulted in a breach of the 50-day EMA, around the 158.10 mark. The break undermined a recent bearish threat and suggests the end of the corrective cycle between Apr 30 - May 6.
• Above here, 159.38 represents a retracement level before the MoF’s ‘line in the sand’ at 160.00 and 160.72, the Apr 30 high and the bull trigger.

Senate Minority Leader Chuck Schumer (D-NY) is expected to force an eighth Iran war powers vote this afternoon. The largely symbolic vote comes after the GOP narrowly defeated a seventh vote 49-50 last week, with Republican Senator Lisa Murkowski (R-AK) becoming the third GOP Senator to back the measure. 

• Senator Bill Cassidy (R-LA), who failed to make the runoff in Louisiana's Republican primary election on Saturday amid pressure from President Donald Trump, could be a potential swing vote for Democrats. Other wavering moderate Republicans, including Thom Tillis (R-NC) and John Curtis (R-UT) are potential yes votes.
• Democratic Senator John Fetterman (D-PA) signalled this week that he is “pretty much locked and loaded” in his support of the US war against Iran. “Something like this is much more important than just voting what your base might demand. Because I think things are much bigger and more important than that. And Iran with a nuclear bomb is one of those things,” Fetterman told Semafor on Monday.
• The resolution can be vetoed by Trump, and the White House dismisses the War Powers Act of 1973, upon which the resolution is based, as unconstitutional. However, the votes ratchet up pressure on the White House to offer Congress greater oversight over military operations in the Middle East and provide more details on the Trump administration's exit strategy. The repeated votes also put frontline Republican lawmakers in a difficult position, voting in favour of an unpopular war ahead of the midterm elections in November.  

• MNI: US REDBOOK: STORE SALES +8.1% WK ENDED MAY 16 VS YR AGO WK
• US REDBOOK: MAY STORE SALES +8.9% VS YR AGO MO