Insights by BoA, SEB and Barclays into the what traders can possibly expect from the US GDP. With probability for a December rate hike over 75%, the US Dollar commands a bullish position. How will the markets respond if the USA Advance GDP falls short of expectation? USD bullish or Bearish?
28th October AtoZForex – Insights by BoA, SEB and Barclays into the what traders can possibly expect from the US GDP. How will the markets respond if the USA Advance GDP falls short of expectation? USD Bullish/Bearish?
Bank of America (BoA)
BoA expects the initial estimate to show growth of 2.5% qoq saar in Q3 a marked improvement from the 1.4% in Q2 versus a gain of 0.8% in Q1. As consumer spending is expected to slow down after a Q2 increase of 4.3%, BoA view was ..
“.. we still expect a solid 2.6% increase in 3Q.”
This increase primarily due to strong auto sales.
On the residential front, BoA expects a decline in in residential investment given recent weakness in the housing starts and existing home sales. The decline in Q3 expected to play a role in Q3.
BoA expects change in private inventories (CIPI) to turn slightly positive and contribute 0.3pp to overall GDP growth.The GDP price index rise by 1.5% annualized in Q3, a marked improvement in prices, as well as for consumers. Core PCE index rising by 1.6% marking a continued pick-up of core consumer prices.
SEB view was that with sluggish growth in the housing sector and real GDP picked in Q3 and a few months ago tracking near 4% in Q3, however, SEB’s view is
“…momentum is weak going into Q4.”
Real spending grew to 2.5% in Q3, core retails have stalled in recent months. SEB forecasts a 2.3% real GDP growth and 2.5% real consumer spending growth in the third quarter. SEB added that ..
“..the FED would have to revise down its 2016 growth forecasts, as policy makers will probably hike in December anyway”
Barclays expects GDP to increase 2.5% q/q saar. Consumption expected to increase 2.5% (biggest swing from Q2 to Q3) and Barclays added..
“we expect a 0.7pp positive contribution to growth from inventories”
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