Put macaroni, water, evaporated milk, salt and dry mustard in a heavy medium saucepan. Bring just to a gentle simmer over medium heat, stirring.
Lower the heat and cook uncovered for 10 to 12 minutes, stirring along the bottom often, until the pasta is tender and the liquid has thickened but still flows. If the liquid becomes too thick before the noodles soften, add reserved water 2 tablespoons at a time.
Remove from the heat and stir in butter until melted.
Add cheddar by handfuls, stirring until smooth, then add black pepper.
Let stand for 2 minutes, stir once more and serve directly from the pot before the sauce becomes too thick.