THE BASIS POINT

Rates End Week Up Slightly. GDP Improves To 2%. See GDP Early Crisis To Present.

Rates were extremely volatile this week. In the previous few weeks rates improved on quantitative easing chatter, and then moved higher earlier this week, then improved slightly after this week’s last Treasury auction: a nice $29 billion 7yr sale yesterday. Following the better-than-expected auction traders saw buying from money managers, hedge funds, insurance companies, some originators (buying back hedges), and pension funds. Rates end the week up just slightly as yesterday’s and today’s mortgage bond gains help to offset six straight negative trading sessions leading up to yesterday. Volatility will increase even more next week with an election, a Fed meeting where they’ll announce quantitative easing plans, and the October employment report.

This morning we got the first of three GDP reports for 3Q. It showed the economy grew at 2% vs. the 1.7% from 2Q. The report said a primary contributor to the number was personal consumption expenditures, which is important since consumer spending is a key driver of economic growth. Normally a number like this which shows economic improvement over the previous quarter would cause rates to rise but rates are trading down slightly today after rising earlier in the week. The last 12 quarters of GDP are at the bottom of this post, and you can also scroll to our data section to auto-create charts, download key data, and keep up with releases using our Economic Calendar. All GDP figures are ‘real’ or inflation-adjusted.

GDP Early Crisis To Present
4Q2007: -0.2% (final)
1Q2008: +0.9% (final)
2Q2008: +2.8% (final)
3Q2008: -0.5% (final)
4Q2008: -6.3 (final)
ALL 2008: +0.4% (final)
1Q2009: -6.4% (final)
2Q2009: -0.7% (final)
3Q2009: +2.2% (final)
4Q2009: +5.6 (final)
ALL 2009: -2.4% (final)
1Q2010: +2.7 (final)
2Q2919: +1.7% (final)
3Q2010: +2.0% (first of three readings)