The Preliminary 2nd Quarter reading for Gross Domestic Product was revised higher to 3.3%, far exceeding expectations of 2.7% and was much more than the 1.9% that was previously reported. Next month we will see the Final reading for the 2nd Quarter GDP – but for now, this number is surprisingly strong and has boosted Stocks while pressuring Bonds lower.
Initial Jobless Claims were reported at 425,000, in line with expectations and the markets had little reaction. Oil prices have climbed back above $120 a barrel as Hurricane Gustav continues to makes its way towards the Gulf of Mexico’s oil and gas platforms.
At 1pm ET, Bonds have another round of supply hitting the market by way of $22 Billion in 5-year Treasury Notes. Yesterday’s 2-year Note auction had so-so results, but today’s Five-year may be more closely followed, so stay tuned.
Bonds have enjoyed a nice little rally after bouncing off of the 50-day Moving Average. Prices are now testing a tough ceiling of resistance at the 100-day MA and are already off the best levels of the day. Even if prices do break above this ceiling, the Bond will have it’s work cut out to break above the 200-day Moving Average, just 49bp above current levels.