US DATA: Real GDP Beats Latest Tracking With Solid Private Domestic Demand
Apr-30 13:10
Real GDP was close to expectations in the Q1 advance, although to us that in itself was surprising as there hadn’t been enough time for consensus to fully adjust to a sharp increase in consumer imports in March data released the day before on Tuesday. Hiding beneath some significant crosscurrents from net trade and inventories, private domestic demand was surprisingly little changed from its 2024 average but no doubt with question marks over the extent to which it’s been boosted by tariff front-running.
- Real GDP fell -0.3% annualized vs consensus of -0.2%, a median of 26 analyst estimates updated yesterday of -0.8%, and GDPNow gold-adjusted at -1.5%.
- There were some significant crosscurrents relative to GDPNow expectations.
- In a less positive sign, changes in inventories were much stronger than expected as they added 2.25pps to GDP (GDPNow had 0.3pp) for the largest positive contribution since 4Q21. That should be a large drag going ahead.
- It was partly offset by an even larger drag from net exports of -4.8pp (GDPNow -4.05pp gold-adjusted). Ordinarily that surprise amidst particularly firm import growth would be a positive development but tariff front-running clouds interpretation.
- Looking through these noisier categories, underlying demand signs were encouraging with resilient consumption growth and a bounce in non-residential investment.
- Personal consumption increased 1.8% (cons 1.2), adding 1.2pp to quarterly GDP growth (GDPNow saw 0.9pp or 1.4%). That said it’s still a sizeable moderation from 4.0% in Q4 and 3.1% averaged in 2024 and that’s despite some likely tariff front-running.
- Non-residential investment meanwhile saw a large bounce from a weak Q4, rising 9.8% to add 1.3pp to GDP growth (strongest quarter since 2Q23) after -0.4pp.
- Government spending however was surprisingly negative on the quarter, dragging -0.25pp (GDPNow 0.3pp).
- That combination meant that final domestic demand increased 2.3% in Q1 after 3.0% in Q4 but private domestic demand impressively accelerated a touch to 3.0% in Q1 after 2.95% in Q4, having averaged 3.0% in 2024.
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STIR: Effective Fed Funds Rate
Mar-31 13:05
- FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $112B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $286B
- Earlier Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.34% (-0.02), volume: $2.440T
- Broad General Collateral Rate (BGCR): 4.34% (-0.01), volume: $946B
- Tri-Party General Collateral Rate (TCR): 4.33% (-0.01), volume: $915B
- (rate, volume levels reflect prior session)
FRANCE T-BILL AUCTION RESULTS: 14/15/25/51-Week BTFs
Mar-31 12:59
| Type | 14-week BTF | 15-week BTF | 25-week BTF | 51-week BTF |
| Maturity | Jul 9, 2025 | Jul 17, 2025 | Sep 24, 2025 | Mar 25, 2026 |
| Amount | E3.297bln | E496mln | E1.991bln | E1.99bln |
| Target | E2.9-3.3bln | E0.1-0.5bln | E1.6-2.0bln | E1.6-2.0bln |
| Previous | E3.394bln | E2.194bln | E1.795bln | |
| Avg yield | 2.259% | 2.244% | 2.211% | 2.131% |
| Previous | 2.328% | 2.282% | 2.226% | |
| Bid-to-cover | 2.37x | 5.29x | 4.11x | 3.24x |
| Previous | 2.58x | 3.18x | 3.1x | |
| Previous date | Mar 24, 2025 | Mar 24, 2025 | Mar 24, 2025 |
CANADA: Goldman Sachs Lower USDCAD Forecasts
Mar-31 12:50
- On the other hand, Goldman Sachs have noted the slightly firmer CAD across March and indicate a couple of factors behind their decision to trim the upside in their USDCAD forecasts. First, tariff focus has shifted away from Canada and towards other regions, probably rightly so given the potential protections under USMCA. Secondly, markets have grown more optimistic on fiscal spending in Canada, alongside investors also turning more hopeful on the ability for the Canadian government to negotiate with the US under a new PM.
- While GS believe the balance of risks to the local currency continues to lean to the bearish side, it has turned slightly less negative. As a result, GS are lowering their USDCAD forecasts to 1.44 in 3, 6, and 12m from 1.46 previously.
- We would note that a return lower and clearance of 1.4235, the Mar 26 low, would be required to undermine the technical bull theme, thereby highlighting the potential for a test of 1.4151, the Feb 14 low and a bear trigger. Alongside NFP this Friday, markets will also receive Canadian employment data.
