On Thursday (April 25), local time, the first estimate data released by the U.S. Department of Commerce showed that gross domestic product (GDP) in the first quarter of 2024 grew at an annualized rate of 1.6%, a significant narrower increase than the 3.4% growth rate in the fourth quarter of last year.
The swap market is no longer fully pricing in a rate cut by the Fed by December.
Data released in March showed that the final value of US GDP growth in the fourth quarter of 2023 was revised upwards to 3.4%, an increase of 0.2 percentage points from the previously released revised data, but still lower than the 4.9% growth rate in the third quarter. Previously, the U.S. economy had maintained a growth rate of more than 2% for six consecutive quarters. For the full year of 2023, the U.S. economy will grow by 2.5%.
PCE data follows closely //
The release of the US GDP data for the first quarter became the focus of the market, while the more critical US Personal Consumption Expenditures (PCE) report followed. As the Fed's preferred inflation gauge, the performance of the PCE data will directly affect the Fed's interest rate decision.
According to data compiled by the media, the year-on-year growth rate of the composite PCE index will further rise to 2.6% in March from 2.5% in the previous value, and the core PCE index is expected to fall to 2.7% from the previous value of 2.8%. The month-on-month growth rate of composite and core PCE is expected to be unchanged at 0.3% in the previous month.
Goldman Sachs expects the annualized growth rate of core PCE in the United States to rise to 4.0% in the first quarter from an average of 1.9% per month in the second half of 2023, which is mainly driven by economic sectors such as consumer electronics, financial services, and healthcare, but with the above momentum extinguished, the monthly continuous growth rate of core PCE inflation will slow from an average of 0.33% to 0.18% from the first quarter to the end of the year.
According to the U.S. Department of Commerce, the U.S. core PCE price index in the first quarter rose by 3.7% on an annualized basis, with an expected increase of 3.4%, a final value of 2.0% in the fourth quarter of 2023, a revised value of 2.1%, a preliminary increase of 2.0%, a year-on-year increase of 2.9%, and a final value of 3.2% in the fourth quarter of 2023.
The preliminary annualized PCE price index in the first quarter of the United States rose by 1.8% from the previous quarter of 2023 and 2.6% year-on-year, with a final value of 2.8% in the fourth quarter of 2023.
Overnight U.S. Stock Market //
The three major U.S. stock indexes closed down across the board overnight, with the Dow down 0.98%, the S&P 500 down 0.46%, and the Nasdaq down 0.64%. IBM fell 8.04% and Caterpillar fell 6.95%, leading the Dow.
The yield on the US 30-year Treasury note rose as high as 4.82% at one point, the highest since November 2023. The yield on the 10-year Treasury note rose 6 basis points to 4.707%.
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