Federal Reserve officials hit the newswires yesterday with leaks outlining the seriousness of the intention to raise interest rates not once but twice before the end of 2015. This came on the heels of the final first quarter GDP reading which showed the economy contracted modestly over the prior period. With growth below trend, market participants are wary of the Federal Reserve raising rates during a period of cyclical weakness. However, the Federal Reserve is unwilling to let the market determine the future of rates as evidenced by the dismissal of the potential volatility that will emanate from any shift in policies. Markets were confident that the latest GDP reading was evidence of a rebound in the real economy as the contributions from rising inventories and spending on healthcare offset the weakness in exports and fixed-asset investment. Equities gave up ground during the cash session, led by losses in the Dow Jones Industrial Average.
US GDP Prints Below Trend
Daily Analysis - 25/06/2015