The Trump Effect: Atlanta Fed Keeps GDP Forecast at 4.4%

$DIA, $SPY, $QQQ, $RUTX, $VXX

Wednesday, the S&P 500 finished with a gainer of 0.1%, driven by financial shares, which rallied on another rise in interest rates.

The blue-chip DJIA outperformed, adding 0.6%, the NAS Comp  lagged, closing lower by 0.1%, and the small-cap Russell 2000 finished – 0.5% on the day.

The US economy is expanding at a 4.4% annualized rate Q-3, the Atlanta Federal Reserve’s GDPNow forecast model showed Wednesday after home-building increased more than expected in August.

The boost in housing starts was seen as a positive sign for the housing market which has under-performed the broader economy amid rising interest rates for home loans.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in Q-3 of Y 2018 is unchanged from 14 September, the Atlanta Fed said.

After Wednesday morning’s new residential construction release from the Census Bureau, the nowcast of Q-3 real residential investment growth inched up from -0.7 to -0.2%.

The next GDPNow update is Thursday, 27 September.

Housing starts rose 9.2% to a seasonally adjusted annual rate of 1.282-M units in August, the Commerce Department said. Analysts polled expected an annual rate of 1.235-M units.

Jeffrey Gundlach, CEO of DoubleLine Capital, Wednesday said bond prices across the US Treasury yield curve could fall if the 30-yr T-Bond yield closes above 3.25% 2X in a row.

The yield on the 10-year T-Note and 30-year T-Bond both hit 4-month highs early Wednesday.

Mr. Gundlach told Reuters he is still forecasting 6% on the 10-yr yield by the next Presidential election in Y 2020 or in 2021..

He added: “My 6% by 2021 call is perfectly on track. No reason at all to change it. A move soon to higher yields would be signaled by the 30-year closing 2 days in a row over 3.25%.”

Wednesday, the US major stock market indexes finished at: DJIA +158.80 at 26405.76, NAS Comp -6.07 at 7950.04, S&P 500 +3.64 at 2907.95

Volume: Trade on the NYSE came in at 827-M/shares exchanged

• NAS Comp +15.2% YTD
• Russell 2000 +10.9% YTD
• S&P 500 +8.8% YTD
• DJIA +6.8% YTD

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Stay tuned…

  bonds, builders, Bullish, DIA, economy, Fed, GDP, growth, home, housing, interest, NYSE, QQQ, rates, RUTX, SPY, starts, stocks, Treasury, Trump, VXX, yield

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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