The government’s cash on hand reached a record level in April thanks largely to record individual income tax collections. Here’s what this means for the markets.
Macroliquidity remains bullish. But US markets have sold off in spite of that.
The Fed’s BS (balance sheet) shrank last week. It was on the order of magnitude of a rounding error. Aside from that, it’s not significant for another reason.
Both the 10 year yield and the dollar show signs of potential reversal as they test major trendlines. The Treasury market in particular is not acting as it should given all the bullish factors that would normally push yields down. This suggests a potential sea change in market sentiment. Here’s what it means and what…
The Treasury settled net new supply of $30 billion last week on Thursday, one of those rare times where the weekly settlement and end of month settlement fall on the same day. Outside of these end of month settlements where the Treasury settles new notes, the market has seen nothing but Treasury debt paydowns since…
The government’s cash has reached a record level. Apparently there’s a bubble in tax collections. That can’t happen on its own, certainly not from the reported near zero growth in GDP. So what’s up?
The composite liquidity indicator continues to mark time as the Fed’s balance sheet remains flat. Other components were weaker in the past couple of week. But animal spirits are rising in response to ECB printing.
With a tidal wave of cash coming in to Federal Government coffers from record tax collections the markets will continue to have the benefit of Treasury paydowns boosting dealer and investor cash levels.
Withholding tax collections through this week have shown strong growth and individual tax collections through April 20 have been at blockbuster levels. But are corporate taxes a sign of storm clouds gathering on the horizon?
The ECB’s QE program isn’t giving the US Treasury market the lift that past ECB expansions have.