A strong GDP reading of 3.2% for the first quarter of 2019 has allayed concerns about a slowing U.S. economy. This result was well above the expected reading of 2.8%. Report highlights include a decline in inflation, which pushed bond yields lower, as well as strong economic data and retail sales. One point of caution within the report regarded built-up inventories. This first quarter build-up may be followed by a decrease later in the year, possibly creating a drag on later GDP readings.
In further good news this week, housing has picked up. This was expected given the time of year and the nice drop in interest rates.
With continued good news on the U.S. economy, important inflations readings next week, and the 10-year Treasury note trading at around 2.500%, we remain biased toward locking-in rates at these levels. However, we do acknowledge that there are many geopolitical and economic issues around the world that could push yields lower in the coming months.