Bond Yields Fall As GDP Estimates Below Expectations

The market is selling off in early trading after a weaker than expected GDP report. Of course, you know that I often say that the headlines are usually just a soundbite for the media to report. The GDP report may have been an excuse to take profits, considering the sharp rally we have had, but profit taking was going to occur at some point anyway.

Nonetheless, advance GDP for Q3 came in at +1.6% vs. expectations for +2.1%. Also, the important price deflator component (inflation) fell to +1.8% vs. expectations for +2.8%. This highlights the trend I have been harping on that inflation has likely peaked for the cycle.

Bond yields are confirming this, and moving sharply lower to 4.67%. Much of the weakness in the GDP report came from housing/construction, but I would expect that Q4 GDP shows a bit of a rebound. Regardless, this likely cements the fact that the Fed is firmly on the sidelines.

In other news and notes:

• Do you think: hard landing or soft landing?
• Michigan Sentiment 93.6 vs. 92.5 consensus
• WFR beats EPS, raises guidance; stock down
• ICBC in China is world's largest IPO
• IR misses estimates, lowers guidance
• DECK handily beats estimates; stock +10%
• ISRG beats EPS, but stock down sharply
• MSFT reports solid qtr., stock higher
• NTGR beats estimates; stock +15%
• CHK CEO says nat. gas going higher

long MSFT, WFR