US Prelim Q2 GDP shows an upward revision
The second reading of Q2 growth for the US has been slightly revised higher. Prelim GDP has come in at +6.6% which was up from the original Advance GDP of +6.5%. However, this came with a slight tinge of disappointment as consensus had forecast for the revision to be a shade higher at +6.7%.
Despite this, an upward revision is still better than where the previous readings were for Q2 growth. Furthermore, Q2 is almost two months ago now and markets are far more interested in more current data and more pertinently still, what Fed Chair Powell has to say on the path of monetary policy in the coming months in his speech at Jackson Hole.
What does this mean?
This very mild upward revision changes very little for the Federal Reserve’s outlook on monetary policy. Markets seem to be going with the slight upward revision to growth being a positive for USD. However, this data will be forgotten quickly as markets begin to refocus on Jackson Hole once more.
Other data announced
At the same time, we also got the announcement of weekly jobless claims. Claims came in slightly higher than the previous week at 353,000 (last week 349,000). This was a shade above the consensus estimate of 350,000. Continuing claims fell slightly to 2.862m from 2.865m and again this was slightly higher than the market estimate of 2.790m.
Initial Market Reaction
After an initial degree of uncertainty, the US 10 year Treasury yield has pulled marginally higher (by around 1.5 basis points). This has allowed USD to strengthen slightly (EUR/USD c. -10 pips lower). We have also seen Gold pulled lower by c. -$5).
This is not a move that we see as continuing for long.