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.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
