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Heads up for bond traders
The revision to the originally estimated third quarter GDP was full of
nasty surprises for bond holders. Basic GDP was revised
to plus 5.5% from the originally reported plus 4.8% and was also higher
than the consensus forecast of plus 5.2%. The implicit
price deflator was revised up to 1.1% from .9%, the worst inflation news in
several quarters. Trade, inventory and personal
spending numbers were all higher than initially estimated. In addition the
weekly new state unemployment claims numbers fell to
274,000 versus the expected small rise to 290,000. Total people receiving
benefits fell to the lowest number since December
1988. These numbers probably mean the expected first quarter slowdown will
be milder than we have been expecting and
more tightening will be forthcoming from our Fed during first quarter.
John Hayden
** Common Sense Is Not Common **
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