April 15 is tax deadline day — and here’s why it’s also important for the stock market

Strategas warns that April 15 Tax Day will drain bank reserves and act as a liquidity headwind for markets. The firm says roughly $700 billion of stimulus helped markets this year but that tax refunds shifting to tax payments — an estimated >$500 billion gross outflow over the next three weeks — will reduce liquidity. The New York Fed is tapering Treasury-bill purchases from $40 billion to a net $25 billion per month, a “step down” Strategas says could tighten conditions. Markets have benefitted from Middle East headlines and earnings, leaving the S&P 500 near 7,000, but Strategas is cautious: a negotiated Iran settlement would make the liquidity drop manageable, whereas renewed conflict amid weaker liquidity would be more challenging for stocks.