US: Focus on budget and jobless claims – Nomura

Analysts at Nomura point out that the fiscal year-to-date US budget deficit grew to $600bn in March, $73bn wider than this time last year as the US government historically posts a surplus in April bolstered by a notable inflow of receipts.

Key Quotes

“We continue to expect the FY18 budget deficit to expand notably to roughly $800bn, up from the $666bn FY17 deficit. Recent tax and spending legislation account for a significant portion of the increase. Net defense outlays reported in the monthly statement for the next few months should be of particular interest to us as they will shed further light on how quickly federal government spending ramps up after the recent budget deal in Congress.”

“Initial jobless claims: Incoming data point to continued strength in the labor market. Weekly claims can often be volatile around holidays. The sharp drop in recent weeks portends a possible pick-up in coming weeks. However, the underlying trend should be intact. We look for initial jobless claims to remain low in the near term.”