Jump to content

Was the July Withholding Tax Surge Merely Seasonal?

Rate this topic


Recommended Posts

 In the matter of Recession? What Recession? I got the following question from esteemed Stoolie, Potatohead.

6 hours ago, potatohead said:

would the sharp rise in withholding be due to the seasonal wave of summer job hiring of students?

Good question. It's an annual rate of change, so there's no seasonality, but this year was an enormous surge from last year, so it still contradicts the idea that the economy is entering recession. Business showed no sign of caution in adding payrolls or boosting pay, or both. A 20% y/y surge in the last week of the month is notable.  

However, I also noted that this strength is unlikely to show up in Friday's jobs report because it's based on a survey date early in the month, for starters. And there are other reasons. 

Meanwhile, back at the charts, yesterday we got a V bottom from a significant sport line, and they took it back to the first concentrated conjunction of resistance lines around 3835-55. There they tried and tried again, but failed to make a higher high, and as of 5 AM New York time, have turned tail. 

But bears have accomplished nothing unless they take out 3805 on the downside for starters. That would probably keep the playing field locked into the 3740-3845 range for the short run. If they don't break below 3805  then we turn our lonely eyes back to 3855. A breakout would have a measured move target of 3950. Bulls would be in charge. 

tvc_d209775e57a9a84c6287931da47c3bac.png

To better understand the big picture right now so that you can take the correct action when the time is right, check out the following:

If you're serious about the underlying forces of supply and demand that drive the markets, join me

If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter. 

 

Link to comment
Share on other sites

In Currency Ville, the Your0 heads for a buck. 

tvc_d956d144709d96fcfd273f4f24c7d779.png

I reiterate the idea that as long as the Fed is tighter than the ECB, and especially if the Fed is removing doolahs from the world market while the ECB is still adding Your0s, this trend will continue. The idea that the Your0 is going to parity is well founded.

But why stop there? The long term measured move target by various patterns is around 0.75-0.80. Indeed, it all depends on when the ECB tightens or the Fed loosens. For anyone like me who earns in dollars, but spends in Your0s, it would seem to pay to hold on to your dollars and convert them for spending only as needed. 

tvc_ff865c31b5a9cb5f4f1890eab7a9c678.png

Liquidity Trader- Money Trends

How Fed and Treasury policy, Primary Dealers, real time Federal tax collections, foreign central banks, US banking system, and other factors that affect market liquidity, interact to drive the financial markets. Focus on trend direction of US bonds and stocks. Resulting market strategy and tactical ideas. 4-5 in depth reports each month. Click here to subscribe. 90 day risk free trial!

 

Link to comment
Share on other sites

The 10 Year Treasury yield has pulled back to its 100 day moving average and various other trend support lines. I must admit that I'm surprised it got this far, but I should not have been. The US Treasury is still paying down T-bills at a clip of $105 billion per month. Some of that cash edges further out along the yield curve, and that causes a chain reaction with other investors seeking yield further out along the curve.

But this is where the rubber meets the road. 

tvc_481c7f1ddbad39b58c938ce53c06856f.png

Liquidity Trader- Money Trends

How Fed and Treasury policy, Primary Dealers, real time Federal tax collections, foreign central banks, US banking system, and other factors that affect market liquidity, interact to drive the financial markets. Focus on trend direction of US bonds and stocks. Resulting market strategy and tactical ideas. 4-5 in depth reports each month. Click here to subscribe. 90 day risk free trial!

Link to comment
Share on other sites

BTC continues to lull its fans into a false sense of security, hanging around 20,000. The 1 year cycle projection remains 13,000.

tvc_3833f40f6d357903e4f91a640f556ea5.png

And the long term measured move target of the big top breakdown is immutable at 5,000 below zero. 

tvc_ded395bb9a63f8ec389244e5310be44c.png

Liquidity Trader- Money Trends

How Fed and Treasury policy, Primary Dealers, real time Federal tax collections, foreign central banks, US banking system, and other factors that affect market liquidity, interact to drive the financial markets. Focus on trend direction of US bonds and stocks. Resulting market strategy and tactical ideas. 4-5 in depth reports each month. Click here to subscribe. 90 day risk free trial!

Link to comment
Share on other sites

After dropping for a while now interested rates are really bouncing today. 91-day treasury IRX Index 1.838% up 12.76%. 10Y and 30Y rates  at 2.913% and 3.139% respectively up over 3% today. The dollar strength is continuing to crush gold, oil and other currencies.

Link to comment
Share on other sites

Bearish views are unsafe in the short run until the hourly oscillators drop below their zero lines. And even then, maybe not. There needs to be a concurrent price drop below 3800 for starters. 

tvc_f7b7bcc872fbde5574d3df24c8424c4c.png

 

Link to comment
Share on other sites

55 minutes ago, sandy beach said:

After dropping for a while now interested rates are really bouncing today. 91-day treasury IRX Index 1.838% up 12.76%. 10Y and 30Y rates  at 2.913% and 3.139% respectively up over 3% today. The dollar strength is continuing to crush gold, oil and other currencies.

Dollar strength is a measure of Fed tightness. It's not cause. It's effect, as are all prices and rates. Liquidity is cause. Price is the measure of effect. We also need to distinguish between short term, intermediate, and longer term trends of those measures, again as measurements of the effects of monetary tightness. Fed has been gradually tightening since announcing the end of QE, and got more aggressive in June, beginning QT- active draining of money from worldwide banking system. 

https://liquiditytrader.com/index.php/category/monetary/

Link to comment
Share on other sites

Yesterday, the US Treasury balance dropped by $97 billion to $685 billion. This brings the Treasury balance to near the desired target of $650 billion.  I had previously projected that Treasury paydowns would end in July. They are on schedule. The shit will hit the fan in the second half of July. 

Recession? What Recession?

  • Like 1
Link to comment
Share on other sites

If they don't hold the line and reverse right here, the measured move target would be 3960-70. 

 

tvc_d2d479989624d8df30c8087606ac9865.png

Link to comment
Share on other sites

The pattern of the past 5 days remains bullish until proven otherwise. It must be broken or else. 

Link to comment
Share on other sites

Did the "FED" just release a statement, or is this the usual QE waiting for

the mysterious rip job into the close......Low in the morning higher at the end.....

or am I/They  being "redundant" / "repetitive"   et, al...........

 

>: above all else......interest rates are still going to NIRP/ZIRP Worldwide

everyone seems to be betting on it, and talking the "narrative"

>:: Euro $ seems to be equal but seperate?

>::: And somehow Gold and Silver keep getting the J. Epstein

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

  • Tell a friend

    Love Stool Pigeons Wire Message Board? Tell a friend!
  • Recently Browsing   0 members

    • No registered users viewing this page.
  • ×
    • Create New...