Strong GDP, steady claims

US GDP robust but misses estimate

A lot of the optimism has been priced in, so financial markets were unfazed with the robust growth in the first quarter and a drop with initial jobless claims.  The economy grew at 6.4%, a miss of the 6.7% consensus estimate, and well above the 4.3% prior.  The whisper numbers for first-quarter growth were closer to 7%, but the slight GDP miss will only mean the second quarter will be that much stronger.  The second-quarter GDP reading will see forecasts in double-digit territory and that should keep risk appetite healthy.  The US economy is going to enjoy a few more months of tremendous data releases on vaccinations, stimulus checks, and pent-up consumer demand.  The second half outlook is up in the air, but for now, everyone wants to ride this last big wave of growth.

Jobless claims fell to 553,000 from an upwardly revised prior reading of 566,000.  The dip in claims was a fresh pandemic low, while continuing claims edged higher to 3.66 million.

Pricing pressures were apparent due to the rise in oil prices, but still came in hotter than expected.  The advance first-quarter GDP price index jumped 4.1%, higher than the 2.6% estimate and 2.0% prior.

US March pending home sales increased 1.9% on a monthly basis, but clearly shows the peak in sales has been put in place.  The February drop of 10.6% was revised lower to -11.5%.  Rising mortgage costs and the return to normal for big cities should mean the housing market will now cool.


The bond market had to send Treasury yields higher now that inflation is here, the case for higher wages is strong and on the lingering prospects of more stimulus.  The economy is going to run hot these next couple of months and the bond market selloff will return and could make Treasury yields attempt to test the end of March highs.  The inflation debate will last months, so the April surge with bond prices will take a break and we probably have seen the bottom with Treasury yields.

The dollar and 10-year Treasury yields rose on expectations US growth exceptionalism will hit peak levels over the next quarter.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.