FED: QT Settling In At $20B/Mth Pace, Discount Window Takeup Ticks Down (1/2)
Federal Reserve assets were little changed in the week to Wednesday May 14, per the Fed's latest H.4.1 release.
- QT is proceeding at roughly the envisaged $20B/monthly pace (vs the effective $40B pre-April). Though there was almost no change in SOMA holdings in the latest week, the 4-week drop was almost exactly that ($16B MBS and $4B Tsys, though offset by an idiosyncratic rise in TIPS values).
- Note in the accompanying chart that the pace of the Treasury taper has fallen to close to $5B/monthly from $25B since the Fed tapered Treasury QT at that pace on April 1.
- Liquidity/lending assets were also little changed. Discount window takeup fell $0.3B in the last week, and $0.5B total over the past month, with takeup at a limited $2.2B.
- There's also been a modeat continuation in the pullback of Pandemic 13-3 programs, totaling $0.3B in the last 4 weeks ($8.6B remains), alongside a $0.1B drop in foreign bank swap lines (which have reverted back to zero after a modest uptick in April).
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US FISCAL: Tax Receipts Picking Up, But Lagging Behind Prior Years (1/2)
As such the tax take so far has arguably been relatively underwhelming: the cumulative corporate + individual tax take (starting from 5 days prior to Tax Deadline day) is $130B, ahead of 2024's $115.5B but below the strong 2022-23 levels (2023 was $137B).
- Individual receipts have totaled $107B so far. We haven't seen many estimates for this month's take but Wrightson ICAP is anticipating April's to total $450B, up 6% vs April last year. By comparison, the tax take through this point last year was just $94B, so there is some improvement on this front.
- April 15 of course is the biggest day for collections, with 2024 seeing $154B and 2023 seeing $105B, and payments will continue for several days thereafter so it is tough to get a good picture now.
- Indeed by tomorrow we should get a good sense of where the Treasury General Account is likely to end up once tax collections are over, with the bulk of the increases already having taken place - see bottom chart.
US FISCAL: Tax Receipts Picking Up, But Lagging Behind Prior Years (1/2)
Daily Treasury data show that tax receipts are - as expected - picking up sharply as we go into the biggest tax collection day of the year, April 15.
- The release for April 14 showed $48.2B in tax receipts deposited with the Treasury. That was split almost evenlly between the two categories we consider: Corporate Income taxes and non-withheld individual taxes.
- This is key data for determining whether Treasury's "x-date" is approaching sooner rather than later. The Treasury General Account rose by $85B to an 18-session high $415.7B.
USDCAD TECHS: Bounces Well
- RES 4: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 3: 1.4415 High Apr 1
- RES 2: 1.4249 50-day EMA
- RES 1: 1.4028/4151 Low Apr 3 / Low Feb 14
- PRICE: 1.3934 @ 16:10 BST Apr 15
- SUP 1: 1.3829/22 Low Apr 14 / Low Nov 6 ‘24
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
USDCAD has bounced off recent lows but a bearish theme remains intact for now. Last week’s move down marked a resumption of the downtrend and has signalled scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear -mode position, highlighting a dominant downtrend. First resistance to watch is 1.4028, the Apr 3 low.
