CIBC Research discusses its reaction to today's US Q4 GDP report.
"US Q4 GDP was not bad, not bad at all, considering all the fretting about a slowdown that dominated the news flow during the quarter. The 2.6% annualized pace was about a half point above our forecast and the consensus, helped by a firmer reading than we expected on business investment spending (up 6.2% annualized). Inventories were also a shade firmer than we expected, but real final sales (GDP excl inventories) was still a decent 2.5%.
Consumer spending came in at 2.8%. That said, both consumption, which ended with a weak December retail result, and capital equipment spending, which saw weaker orders, seemed to lack momentum heading into Q1, a reason to expect a further slowing to start 2019. Core PCE at 1.7% also gives the Fed time to wait and see," CIBC notes.
"The stronger outturn in Q4 will be a negative for fixed income markets today, and supportive for the US dollar and cyclical equities," CIBC adds.