Yields rise as data shows strong GDP growth. Treasury yields rose ~5 bps to intraday highs after GDP data showed the fastest growth in two years, although much of the move reversed following weaker-than-anticipated consumer confidence data released later in the morning. The 2-year yield closed 3 bps higher at 3.53%, and the 10-year yield closed nearly flat at 4.16%. Meanwhile, equities climbed on an advance in technology names, with the S&P 500 and NASDAQ up 0.46% and 0.57%, respectively.
Third-quarter GDP posts fastest growth in two years. Inflation-adjusted GDP expanded at a 4.3% annualized pace, above expectations of 3.3% and 3.8% in the prior period. Growth was supported by resilient consumer and business spending, as well as the rollback of some US tariffs. Consumer spending rose at a 3.5% annualized pace last quarter, led by health care and international travel. Meanwhile, business investment grew at 2.8%, supported by investments in data centers and AI infrastructure. Despite this strength, many economists expect fourth-quarter GDP to be weighed down by the government shutdown, with a modest rebound anticipated in 2026 as households receive their seasonal tax refunds and as further US tariff policy reversals are expected.
Consumer confidence falls for fifth straight month. The Conference Board gauge for consumer confidence came in at 89.1 in December, marking the fifth month of decline and the longest downward streak since 2008. The level was below estimates of 91 and November’s 92.9. Further, the measure of present conditions dropped to 116.8, well below last month’s 126.9, and the lowest level since 2021. Today’s report cites consumer concerns about the labor market and business conditions as driving the decrease. The figures also emphasize consumer concerns about inflation and tariffs, and the December decline comes despite experts predicting a slight rebound in confidence following the government shutdown. Consumers also reported declines in their plans to buy major appliances, cars, and houses, as well as in their likelihood to plan a vacation.
