First-Quarter GDP Could Look Ugly
Surprisingly low auto sales and recent trade data don't bode well for first-quarter GDP, but we're not particularly concerned.
It was a tough week for the markets, as worries about first-quarter economic growth, especially in the U.S., began to set in. Over the past week or so, economic growth expectations have dropped from 2% to well under 1%. As one might expect, that helped make U.S. equities one of the worst performers this week and decreased bond rates. The U.S. 10-year Treasury rate has dropped from 1.79% last week to 1.7%.
However, the weaker economic expectations did not take their usual toll on oil, with signs that U.S. producers are finally taking product cuts more seriously. Commodities in general were up about 1.5% for the week. Europe and developed markets outside the U.S. were little changed for the week, which was better than U.S. market performance, as a lot of the poor economic news this week was from the U.S. However, emerging markets took it on the chin again, down 2.3% as investors generally moved to risk-off positions as economic prospects dimmed in the U.S., especially in the first quarter.