US GDP Advanced for Q2 2.8% vs 2.0% estimate

• Prior quarter (Q1) 1.4%. In the Q42023., growth rose by 3.4%
• GDP Q2 2.8 % vs 2.0% estimate. The Atlanta Fed GDPNow estimate was at 2.6%
• GDP sales 2.0% versus 1.9% estimate. Prior 2.0%
• GDP consumer spending 2.3% vs 1.5% prior
• GDP deflator 2.3% versus 2.6% estimate. Prior 3.1%
• GDP core PCE prices 2.9% versus 2.7% estimate. Prior 3.7%
• PCE prices advanced 2.6% vs 3.4% prior.
• PCE ex food and energy and housing 2.5% vs 3.3% prior
• PCE services ex Energy and housing 3.3% vs 5.1% prior
• inventories jumped 6.9% adding 0.8% to the quarterly GDP data
• business investment rose by 5.2% clip as companies invest in equipment (think chips)

Primarily consumer spending from increases in services and goods (up 2.3%). Also inventory increased this month (last quarter the inventories subtracted from GDP). The change in inventory added 0.8% vs a decline of -0.4% last quarter

The decline in the PCE measures is good news for inflation, although the core PCE was higher than expectations at 2.9% versus 2.7%, it was down sharply from 3.7%. The headline PCE tumbled from 3.4% to 2.6%.

The end-of-year Fed projections shows -69 basis points versus 72 basis points prior to the releases of GDP and durable goods

Stock futures are implying (but volatile):

• Dow up 60 points
• S&P up 3 points
• NASDAQ index down -4.3 points

the US debt market, yield still remain lower:

• 2 year yield 4.399%, -1.6 basis points.
• 5-year yield 4.118%, -3.3 basis points
• 10 year yield 4.236%, -4.9 basis points
• 30-year yield 4.493%, -5.5 basis points

The USDJPY has moved higher after continued declines took the pair toward a swing level near 151.93. The low reached 152.08.

NOTE: The Atlanta Fed GDPNow estimate forecasts 2.6%. NOTE 2: It is likely that the inventory and trade data from yesterday was not included in the calculation. That might have been a small negative to the GDP. NOTE 3: This is the first cut in what will be a series of estimates over the next few months.

This article was written by Greg Michalowski at www.forexlive.com.