Data released today in the US showed that the federal government ran a surplus of $214.3 billion in April. According to analysts at Wells Fargo, rising equity markets and more tax certainty likely helped boost nonwitheld tax payments, but they noted that the deficit in the second half of the year remains large.

Key Quotes:

“Nonwitheld individual income tax payments, or taxes paid not directly taken out of a paycheck, typically surge in April as taxpayers square up with the federal government. Nonwitheld collections have been solid this year, with rising equity markets and more tax certainty likely boosting capital gains realizations.”

“This surge in tax payments, a phenomenon we anticipated as far back as last July, helped bring down the government’s Q2 borrowing need even more than usual.”

“Strong tax collections in April, however, have not altered our view that the budget deficit will materially worsen in the second half of the year, driving a much larger borrowing need.”