US TSYS: Late SOFR/Treasury Option Roundup: Put Unwinds, Call Adds

• RES 4: 1.3119 76.4% retracement of the Sep 26 ‘24 - Jan 13 bear leg
• RES 3: 1.3048 High Nov 6 ‘24
• RES 2: 1.2990 High Nov 8 2024
• RES 1: 1.2988 High Mar 12
• PRICE: 1.2939 @ 14:55 GMT Mar 12 
• SUP 1: 1.2768 Low Mar 5     
• SUP 2: 1.2718 20-day EMA
• SUP 3: 1.2605 50-day EMA and a short-term pivot support  
• SUP 4: 1.2559 Low Feb 28      

The trend in GBPUSD is unchanged, it remains bullish despite the fade off the intraday high. Moving average studies have recently crossed into a bull-mode position, highlighting a clear dominant uptrend. A Fibonacci retracement at 1.2924, 61.8% of the Sep 26 ‘24 - Jan 13 bear leg, has been pierced. A clear break of this level would open 1.2990, the Nov 8 2024 high. Initial firm support is 1.2618, the 50-day EMA. A pullback would be considered corrective.    

February's Federal budget balance came in almost exactly as expected at $307.0B ($308.0B survey), an increase from $296.3B in the same month of 2024. That brought the cumulative budget deficit through the first 5 months of the fiscal year (starting in Oct) to $1.147T - outpacing easily outpacing the previous year's total to this point of $828B, and exceeding even 2021's post-covid $1.05T for a new 5-month record.

• The wider February total is also despite a pickup in revenues ($296.4B vs $271.1B in Feb 2024), as expenditures maintained their strong recent record ($603.4B vs $567.4B in Feb 2024). February is seasonally one of if not the lowest revenue months of the year.
• Total receipts are up 1.9% Y/Y in the first 5 months of the current fiscal year compared with the same period a year earlier - but outlays are up 13.2% Y/Y.
• One of the categories causing expenditure to pick up is net interest, which came in at $74.2B, boosting the 12-month cumulative total to a fresh record $927B - roughly 3x the amount seen at the recent low in 2021.
• Absent a significant turnaround, the FY 2025 deficit is on pace to exceed the $1.9T projections made by the Congressional Budget Office's in mid-January, and the Office of Management and Budget's made in July 2024. Either way, it's set for an ex-Covid record.

A new CNN survey has found that Americans are “not impressed” with Trump’s stewardship of the economy, “putting him underwater on the nation’s top issue even as he sees ratings among the best of his presidential career on other key priorities.”

• CNN notes: “As markets slide and investors worry in response to Trump’s trade policies, a 56% majority of the public disapproves of his handling of the economy, worse than at any point during his first term in office. By contrast, the 51% who now say they approve of his work on immigration – headlined by stricter enforcement efforts – is 7 points higher than at any point during his first term.”
• Morning Consult notes in a separate report: “Voters are roughly split on Trump’s handling of the economy and trade policy, marking double-digit declines in his net approval rating on those topics since he took office.”
• Morning Consult adds: “Just 19% of voters say Trump’s tariffs on America’s top trading partners are primarily about the flow of fentanyl into the U.S., which is the main reason he’s cited.”

Figure 1: "Do you approve or disapprove of the way Donald Trump is handling..."

Source: CNN