Back
4 Aug 2014
A positive growth story from the US - BAML
FXStreet (Guatemala) - Analysts at Bank of America Merrill Lynch explained that the better-than-expected 2Q GDP growth and the upward revision for 1Q and 2013 paint a positive growth story for the US.
Key Quotes:
“The 6q moving average of GDP growth rose to 2.4% in 2Q, near the highest level since the recovery began."
"This contrasts sharply with the numbers before the revisions which together with the consensus forecast for 2Q would have placed the 6q moving average of GDP growth at just 1.8%, close to the lowest level in five years”.
“We suspect the new information will go some way to help diminish the prevailing pessimism about the US economy's potential growth rate, especially given the signs of stabilization of the labor participation rate”.
"In our view, 5y rates five years forward (perhaps the closest thing to the market's forecast of potential GDP growth), which are 100bp below where they were at the start of the year, are too low, especially with elevated inflation breakevens. We expect a rise towards 4% over the course of 3Q, with the likely firming of healthcare spending in 2H as well as the growing supply of long-dated Treasuries that the market will have to absorb without help from the Fed or China."
Key Quotes:
“The 6q moving average of GDP growth rose to 2.4% in 2Q, near the highest level since the recovery began."
"This contrasts sharply with the numbers before the revisions which together with the consensus forecast for 2Q would have placed the 6q moving average of GDP growth at just 1.8%, close to the lowest level in five years”.
“We suspect the new information will go some way to help diminish the prevailing pessimism about the US economy's potential growth rate, especially given the signs of stabilization of the labor participation rate”.
"In our view, 5y rates five years forward (perhaps the closest thing to the market's forecast of potential GDP growth), which are 100bp below where they were at the start of the year, are too low, especially with elevated inflation breakevens. We expect a rise towards 4% over the course of 3Q, with the likely firming of healthcare spending in 2H as well as the growing supply of long-dated Treasuries that the market will have to absorb without help from the Fed or China."