While economic data has been largely pushed out of the spotlight recently by Korean peninsula geopolitics, life for economists, investors and traders still goes on. The US Commerce Department released first quarter (Q1) 2018 “advance” GDP estimates on Friday night Australian time and they indicate the US economy grew at an annualised growth rate of 2.3%. This estimate is the first of four estimates and subject to three more revisions over the next two months.
The growth figure is above the 1.8% median of market estimates but lower than the fourth quarter figure of 2.9%. NAB Head of FX Strategy Ray Attrill looked beyond the headline figures and saw some fragility. “The detail of the GDP data was less impressive, however, with private consumption rising by only 1.1% despite the boost to incomes in the quarter from January’s tax cuts, and inventories making a relatively large 0.4% contribution to growth.”
Yields of US Treasury bonds finished the day generally a little lower while reactions in currency markets were more mixed. 2 year bond yields remained unchanged at 2.48% while 10 year bonds were 2bps lower at 2.96%. The USD was weaker against yen and euro but stronger against sterling after UK GDP figures were well below expectations. Afterwards, futures markets were still factoring in a second rate rise for the year from the US Fed in June.