Wall Street just traversed a gantlet: the busiest week of corporate quarterly results, fresh developments in global trade relations and a historic stock tumble by Facebook Inc. However, the headliner of this jam-packed week may be GDP, the official scorecard of the U.S. economy.
As one fixed-income strategist put it, never has a reading of gross domestic product held so much significance, with the three main equity benchmarks—the Dow Jones Industrial Average DJIA, +0.44%[1] the S&P 500 index SPX, -0.30%[2] and the Nasdaq Composite Index COMP, -1.01%[3] —as well as the U.S. dollar DXY, -0.03%[4] and Treasury TMUBMUSD10Y, -0.06%[5] TMUBMUSD02Y, +0.31%[6] markets primed for Friday’s highly anticipated print.
Here’s how Guy LeBas, head of fixed-income strategy for Janney Montgomery Scott, put it via Twitter on Thursday: “I can’t remember the last time the markets placed such importance on a #GDP number as they have with tomorrow. Given the perceived optimism, a miss could catch rates violently offside (i.e., rally risk),” he wrote.
I can't remember the last time the markets placed such importance on a #GDP[7] number as they have with tomorrow. Given the perceived optimism, a miss could catch rates violently offside (i.e., rally risk).
— Guy LeBas (@lebas_janney)
What’s all the fuss about?
Second-quarter GDP data on Friday is set to be released at 8:30 a.m. Eastern and may reflect one of the fastest rates of economic expansion since a 5.2% print in the third quarter of 2014, and if it comes out ahead of that figure, it would be the best GDP report since 2003, writes MarketWatch’s Steve Goldstein[9].
Growing buzz around the possibility of such a strong read comes as the White House has been suggesting that the number from the Commerce Department will be huge.
On Thursday, White House economic adviser Larry Kudlow predicted that the second-quarter GDP release will live up to the billing.
“You’re going to get a very good...