April 6. Public finance/tax fury
–The Atlanta Fed GDP Now forecast for Q1 was revised down to a new low of +0.4 from 0.7 last Friday. In February it was above 2.5%. Clearly ices the Fed if that information is correct, and that’s what the market is reflecting. All near one-year calendar spreads in ED made new lows. For example, June’16/June’17 settled 22.5, down 2.5 on the day. The lowest one year spread is Dec’16/Dec’17 at just 20 bps. On the Feb 11 panic this spread had spiked down to 13 during the day. There are no one-yr spread over 1/4% until greens to blues. Red to blue pack spread closed at a new low of just 48.5 bps.
–Today the Fed minutes are released. Prior to that Mester speaks at 12:20 EST. More importantly, Dudley speaks tomorrow on the economy at 8:30, Q&A expected. However, I saw a clip after Yellen’s speech where he said he agreed with everything she said.
–China’s Service PMI better than expected 52.2. US stocks have bounced slightly and treasuries pulled back.
–Is it just me, or did a LOT of tax grab and tax haven fury news come out over the past two days? Obviously the Panama Papers have tax officials scrambling to collect what has been misappropriated. Iceland’s PM forced to resign. Several politicians have weighed in on tax inversion schemes; Pfizer / Allergan deal deep sixed due to new rules. CA signed the $15 minimum wage. News stories indicate that David Tepper moving himself and his firm to Florida will blow a hole in NJ’s budget. Kashkari continues to drone on about too big to fail. Just seems like a convergence of tensions starting to simmer in a big way, magnitudes of Occupy Wall St. Group hug and buy some treasuries.
