The surge in gas has been a function of inventory concerns ahead of the peak summer driving season. We argue that the negative demand shock associated with higher prices pump does not bode particularly well in combination with deteriorating confidence, incomes and of course, wealth. PCE, NAPM and Payrolls For those who view the surprisingly strong first quarter GDP data as evidence that the economy will not dip in to recession, the week's economic data may provide a counter view. A modest rise in spending turns flat on a chain-weight basis, leaving no boost from the consumer since January. The announced corporate layoffs arrive with some delay as the decline in March service payrolls helped to leave the strongest decline in payrolls since 1991.
Growth continues to slow despite the view from the rear view mirror.
The Treasury announces the paydown estimates for the current and following quarter on Monday prior to Wednesday's refunding announcement. The lower than expected cash balance at the start of the quarter and weaker tax receipts argue for a downward revision in the paydown estimate. While the technical backdrop remains largely unchanged from last week, the recent curve flattening has yet to alleviate the discount at the back end to any significant degree. Inc. All Rights Reserved.