Daily Market Color

1Q24 GDP Growth and Inflation Were Cooler Than Initially Estimated

Slew of economic data drives a rate decline. This morning’s GDP, personal consumption, and personal consumption expenditures (PCE) figures showed signs of a slowing US economy and decreased inflationary pressures. Swap rates declined as a result, as markets speculated that the data could increase the probability of earlier rate cuts. New York Fed President Williams contributed to the rate decline as well, as he stated that he expects inflation to slow throughout the remainder of the year. Rates fell 5-6bps across the curve, with most of the move occurring in the early goings of the session.

1st quarter GDP and core PCE growth revised downward. US GDP grew at 1.3% in 1Q24 according to the second estimate released today, lower than the initial 1.6% reading. The decline was driven by lower consumer spending – personal consumption growth was 2.0%, down from the initial 2.5% estimate. Also released today was the second quarterly PCE growth estimate, which was slightly lower at 3.6% vs. 3.7% initial estimates.

More PCE figures are on deck. The Fed’s preferred gauge of inflation data, set for release tomorrow, is expected to remain flat in April from March. Core price growth is expected to have grown 2.8% year-over-year and 0.3% month-over-month. 2.8% growth would match the lowest level since March 2021, while 0.3% would remain above levels reached throughout the latter half of 2023.

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