April Tax Collections Part 2 - Contradicting the Strength in Withholding

In the previous report on April tax collections we saw the huge surge in withholding taxes. It foreshadowed the surprise gain in the April jobs report. Don't be surprised if there's more of the same in May. The jobs report surveys are based on the week including the 12th of the month. The surge in withholding lasted through the end of April, and has continued in May. But make no mistake, at this stage of an expansion, "good news" is bearish. It will encourage the Fed to move to real tightening, not just the phony interest rate increases. Real tightening would mean shrinking the balance sheet.

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