Treasury yields were initially lower to start the morning thanks to higher inflation out of Germany and an improved risk tone in Chinese markets, and yields remain higher/steeper following the release of the Q2 GDP report. The first estimate of second quarter growth was 6.5% q/q (annualized), nearly 2 points below the Bloomberg median survey of 8.4%. Personal consumption was up 11.8%, higher than expected and the second consecutive double-digit quarterly growth rate. Detracting from Q2 growth was another decline in inventories (supply chain issues), an expanded traded deficit, and a decline in residential investment. The GDP price index was up 6% in Q2, the highest reading since 1981, and even with the downside miss for headline growth, U.S. GDP has now eclipsed the pre-Covid peak.
Yesterday’s FOMC meeting offered no major surprises for financial markets. If anything, it was perhaps a bit less dovish that some had expected given the recent spread of the delta variant. The committee acknowledged recent progress made toward its policy goals but still short of the “substantial further progress” hurdle it has set for QE tapering. Chair Powell was his usual self in the press conference. He remains more dovish and wants to see at least a few more months of strong job growth, and despite some growing hawkishness of some FOMC participants revealed by the minutes of the last meeting, tapering is still likely a late 2021/early 2022 event.
Chief Investment Officer
|7/29/2021||GDP Annualized QoQ||8.40%||6.50%||6.40%||6.30%|
|7/29/2021||GDP Price Index||5.40%||6.00%||4.30%||—|
|7/29/2021||Core PCE QoQ||6.10%||6.10%||2.50%||2.70%|
|7/29/2021||Initial Jobless Claims||385k||400k||419k||424k|
|7/29/2021||Langer Consumer Comfort||—||—||51.5||—|
|7/29/2021||Pending Home Sales MoM||0.00%||—||8.00%||—|
|7/29/2021||Pending Home Sales NSA YoY||-3.30%||—||13.90%||—|
|7/30/2021||Employment Cost Index||0.90%||—||0.90%||—|
|7/30/2021||Revisions: Personal Income and Outlays|
|7/30/2021||Real Personal Spending||0.30%||—||-0.40%||—|
|7/30/2021||PCE Deflator MoM||0.60%||—||0.40%||—|
|7/30/2021||PCE Deflator YoY||4.00%||—||3.90%||—|
|7/30/2021||PCE Core Deflator MoM||0.60%||—||0.50%||—|
|7/30/2021||PCE Core Deflator YoY||3.70%||—||3.40%||—|
|7/30/2021||MNI Chicago PMI||64.1||—||66.1||—|
|7/30/2021||U. of Mich. Sentiment||80.8||—||80.8||—|
|7/30/2021||U. of Mich. Current Conditions||84.5||—||84.5||—|
|7/30/2021||U. of Mich. Expectations||78.4||—||78.4||—|
|7/30/2021||U. of Mich. 1 Yr Inflation||4.80%||—||4.80%||—|
|7/30/2021||U. of Mich. 5-10 Yr Inflation||—||—||2.90%||—|
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