The US IRS is investing upward of $80 billion to improve tax enforcement and customer service. The plan includes hiring nearly 30,000 new employees, including more data scientists for enforcement, and using new technology to identify audit targets. The funding aims to close the "tax gap" and rebuild audit capabilities, with a focus on auditing the wealthiest Americans. However, concern remains after the previous announcement by the IRS on auditing any transaction above $600 that is perceived as unnecessary and outright predatory. The move coincides with the launch of FedNow services that process all interbank transfers and will enable the IRS to perform audits more easily as all the data on money flow is aggregated into one system. The service is expected to fully launch in July this year.
EQUITY
Major US stock indexes closed higher, supported by gains in Alphabet and Microsoft. Alphabet's announcement of adding AI features to its search engine drove the company's share price up by 3.76%. Initial jobless claims fell to 228,000, but data from earlier in the week suggested a slowing economy. Non-farm payrolls and unemployment rate will be the focus for the week's end.
GOLD
Gold was hit hard in the Asian trading session after stocks rallied. The Thursday candle does not instill confidence for gold to continue upward for a while, and a pause on Friday trade will probably send gold lower on nonfarm payroll and unemployment data.
OIL
Despite OPEC+ announcing plans to cut a further 1.7 million barrels of daily output, crude prices did not climb beyond the initial rally. It remained to be seen whether the cut was due to a belief that the global economy was heading for a difficult period or a price war declaration.
CURRENCY
The greenback was mostly unaffected by higher jobless claims. India has started to cut interest rates by 25 points, although inflation is still high at 6.44%. The pound fell on weaker construction data supported by a higher housing price index. It remains uncertain whether the Fed will hike or pause.
