After the first day of the week saw the DJIA up over 200 points and the S&P 500 index more than 20 points higher, the second day brought more of the same with the S&P back above 2700 for the first time since March 22nd and the VIX index of volatility of equity market volatility down at 15. Futures markets overnight have seen the S&P hold this psychological support, whilst the DJIA is within 200 points of getting back to 25,000. The USD index against a basket of major currencies finished unchanged on Tuesday around 89.05 having at one point been as low as 88.80, but the weakness of the GBP/USD exchange rate this morning has helped push the USD up to 89.20.
Although Tuesday was the deadline for filing tax returns in the United States, the Internal Revenue Service has extended this until today due to a computer malfunction. Last year, about 90 percent of tax returns submitted by April 21 were e-filed, according to IRS data so the extension was swiftly expedited. With ‘Tax Day’ being so topical, the Administration has not been slow to use social media. Vice-President Mike Pence tweeted, “Thanks to the historic TRUMP TAX CUTS, today marks the last time the American people will file taxes under a complicated & outdated tax system. Our Tax Cuts– the largest in American history– will save YOU money, increase opportunity & create more JOBS for American workers.” The White House itself said, “When we began our push for tax cuts, I promised that our bill would result in more jobs, higher wages, and tremendous relief for middle-class families, and that is exactly what we have delivered.”
In incoming economic news, US industrial production rose a better than expected 0.5% m/m in March which took the y/y rate up to 4.3%; the fastest pace of growth since February 2012. Behind the headlines, however, there was a huge 3.1% m/m jump in energy output – entirely due to the pattern of weather in February and March – and manufacturing production rose a much more subdued 0.1% m/m. With capacity utilization rising three-tenths to 78.0% and housing starts very slightly stronger than expected, the Atlanta Fed nudged its Q1 GDP forecast back up to 2.0%. As well as three Fed speakers, the highlight of today will be the Federal Reserve’s Beige Book on current economic conditions. The USD index opens this morning in North America around 89.20.