The US Dollar is holding near support after yesterday’s 75bp rate hike from the FOMC. This morning brought a GDP print to the tune of -0.9% for Q2, after a -1.6% in Q1. Tomorrow brings PCE data and Consumer Sentiment.
, which printed in negative territory again. This was the advance read so it’s subject to revisions, but the print came in at -0.9% which was well-below the expected 0.5% read. It’s not as bad as last quarters -1.6% but, nonetheless, it does show continued deterioration as the Fed has continued to lift rates, and this brings up an important point.
Rate hikes take time to transmit through an economy, and we’re likely still seeing the impact from the Fed’s initial hikes filtering-in. This was something noted by Chair Powell at yesterday’s presser and something that equity bulls really seemed to run with, driven by the prospect of the Fed slowing rate hikes in the coming months should economic data continue to deteriorate.
This morning brought a breakdown in US yields as the 10-year pushed down to a fresh three-month-low. This illustrates that theme fairly well, with yields on the longer-end of the Treasury curve falling even as the Federal Reserve hikes rates, helping to boost the short-end of the curve. I talked about the yield curve in greater depth in the Tuesday article, and if you’d like to read more you’re certainly welcome to check that out. It’s towards the top of the
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