Announced this morning, the first reading on GDP for the third quarter of 2023 came in at an annualized rate of 4.9%, higher than expected but less than the 5.4% estimate from the Atlanta Fed GDPNow measure. Personal Consumption was strong while Nonresidential Fixed Investment was relatively weak. In addition, Initial Jobless Claims were 210,000 for the week ending 10/21, higher than expected and more than the previous week. Continuing claims were 1,790,000 for the week ending 10/14, also more than expected.
Overall, a strong increase in the first reading for GDP for the third quarter coupled with jobless claims that remain in the low 200,000s and a slightly higher trend in continuing claims in recent weeks. Consumers continue to spend despite inflation levels remaining above the Federal Reserve’s targets. Keep in mind, the Federal Reserve at one point had a forecast for negative economic growth in the second half of 2023, which has not materialized. Given the continued resilient labor market, a growing economy, and a more active geo-political landscape, the Federal Reserve is likely to stick with their higher for longer approach to interest rates. Amidst this environment, company earnings and consumer spending will remain keys for the markets and economy in weeks ahead.
In all, the 10-year US Treasury yield ticks lower following the report and equity futures are lower as we head into the market open.
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