April 26, 2019 Headlines

The Treasury curve is lower and steeper this morning following the release of Q1 GDP, which showed a lower than expected increase in inflation. The front end of the curve is down 5 basis points while the long end is down 3 basis points and the spread between the 2-year and 10-year part of the curve is sitting at 22 basis points (+8 basis points MTD).

The main focus of the market this morning has been the strong Q1 GDP print, 3.2% vs 2.3% expected. This expansion was driven primarily by upticks in inventory and trade, two more volatile components of GDP, up 0.65% and 1.03% respectively. However, the first quarter showed weakness in demand as consumer spending (70% of US GDP) increased only slightly while business investment slowed over the first three months of 2019. Without increases in consumer spending it will be difficult for the economy to maintain this level of expansion. The GDP release also showed relatively tame inflation, with the price index increasing by 0.9%, 0.3% lower than expectations.

Hafizan Hamzah
Director, Investment Management Group

Date	Event	Surv(M)	Actual	Prior	Revised
04/22/19	Chicago Fed Nat Activity Index	-0.1	-0.15	-0.29	-0.31
04/22/19	Existing Home Sales	5.30m	5.21m	5.51m	5.48m
04/22/19	Existing Home Sales MoM	-3.80%	-4.90%	11.80%	11.20%
04/23/19	FHFA House Price Index MoM	0.50%	0.30%	0.60%	—
04/23/19	Richmond Fed Manufact. Index	10	3	10	—
04/23/19	New Home Sales	649k	692k	667k	662k
04/23/19	New Home Sales MoM	-2.70%	4.50%	4.90%	5.90%
04/24/19	MBA Mortgage Applications	—	-7.30%	-3.50%	—
04/25/19	Initial Jobless Claims	200k	230k	192k	193k
04/25/19	Continuing Claims	1682k	1655k	1653k	1654k
04/25/19	Durable Goods Orders	0.80%	2.70%	-1.60%	-1.10%
04/25/19	Durables Ex Transportation	0.20%	0.40%	-0.10%	-0.20%
04/25/19	Cap Goods Orders Nondef Ex Air	0.20%	1.30%	-0.10%	0.10%
04/25/19	Cap Goods Ship Nondef Ex Air	0.10%	-0.20%	-0.10%	0.20%
04/25/19	Bloomberg Consumer Comfort	—	60.8	60.3	—
04/25/19	Kansas City Fed Manf. Activity	8	5	10	—
04/26/19	GDP Annualized QoQ	2.30%	3.20%	2.20%	—
04/26/19	Personal Consumption	1.00%	1.20%	2.50%	—
04/26/19	GDP Price Index	1.20%	0.90%	1.70%	—
04/26/19	Core PCE QoQ	1.40%	1.30%	1.80%	—
04/26/19	U. of Mich. Sentiment	97	—	96.9	—
04/26/19	U. of Mich. Current Conditions	—	—	114.2	—
04/26/19	U. of Mich. Expectations	—	—	85.8	—
04/26/19	U. of Mich. 1 Yr Inflation	—	—	2.40%	—
04/26/19	U. of Mich. 5-10 Yr Inflation	—	—	2.30%	—

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