The Banking and Strategy Initiative

Chillin' out till it needs to be funded

US Economy (EoD Review): US Budget Deficit back on track, 3 yr auction successful

Even as Receipts grew and expenses declined while Net Interest Payments grew, the February deficit was the highest in four years at $231.9 bln. The Budget Deficit on the Treasury however still tracks at 9.4% lower ($60 bln) than the corresponding Oct-Feb in 2011. Income Tax rates will likely be lowered in the coming budget exercise even as the Jobs coming back into the economy are a slow trickle and the spectre of underwater mortgages still haunts the housing market and the Economy in general

Receipts were $103.4 bln lower by $7 bln from Feb 2011 and Outlays at $335 bln higher. Marketwatch reports that the Fed Deficit is likely to be 16% lower this year but still over the $1T line, having grossed $580 bln in five months.

In the meantime, NFL needs a revamp too, though Gregg Williams’ Bounty system is not the answer and Manning will cost his prospective owners whether in the AFC East or elsewhere with his brother in the NFC conference.

US annual federal deficits 1901 to 2006 redblue

Image via Wikipedia

Meanwhile yields were better on the 3 Year Auction turning upwards from the depths to 0.456% almost 10 bp higher and with the best Bid Cover ratio for the year. The FOMC is currently in progress and the corresponding announcements will come tomorrow afternoon.

Housing data is due in another week. 3 mo and 6 mo auctions were also successful with higher near 5 bid cover ratio pulled by demand from investors even as the uptick in yields failed to match February levels in the 3 mo Treasuries.

The morning reports on retail sales tomorrow are expected to confirm the improvements esp with the uptick in Auto sales though Gas may correct from the numbers in January and the number to watch will be Retail ex Auto ex gasoline which was up 0.6% last month

Yearly retail sales increase still hover at 3% having fallen from the 5% range of the second half of last year


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