The first look at third quarter GDP was weaker than expected

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Published Date 10/30/2024

Yesterday September JOLTS job openings fell 400K from August, the lowest openings since 2021. October consumer confidence from the Conference Board leaped to 108.7 (1985=100), up from 99.2 in September. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased by 14.2 points to 138.0. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—increased by 6.3 points to 89.1, well above the threshold of 80 that usually signals a recession ahead. Confidence the highest since 2021.

This morning the October ADP private jobs were expected up 115K, reported +233k and September jobs originally reported at 143K revised to 159K; the most since July 2023. "As we round out the year, hiring in the U.S. is proving to be robust and broadly resilient," said Nela Richardson, chief economist, ADP. Meanwhile, annual pay gains for job-stayers dipped to 4.6%, continuing a two-year slowdown. For job-changers, pay gains slowed to 6.2%.

The news yesterday dropped the 10 year note 3 bps, the 2 year note -3 bps; MBS prices ended the day +14 bps after trading -25 bps at 9:30 am yesterday. Overnight the 10 year note yield fell to 4.22% -4 bps from yesterday, the data this morning flipped the note from -4 bps to 4.26% unchanged from yesterday.

The first look at Q3 GDP this morning somewhat disappointing, the expectations were GDP +3.0 the same as Q2, growth reported at +2.8%. Q3 personal consumption expenditures year/year thought to be +3.0% increased 3.7%. It is the first of three Q3 releases and subject to revisions next month (11/27), the final on December 19th.

Weekly MBA mortgage applications last week -0.1%, purchase applications +5.0% while re-finances declined 6.3%.

A mixed picture over the last 24 hours, job openings fell by 400K the most in three years yet ADP reporting more jobs added than forecasts, the most over a year. The most surprising though, the confidence level of consumers (see above). Last Friday the University of Michigan consumer sentiment index also stronger than estimates.

At 9:30 am the DJIA began -63, NASDAQ +12, S&P -6. 10 year note at 9:30 am 4.23% -3 bps. FNMA 5.5 30 year coupon at 9:30 am +11 bps from yesterday’s close and +51 bps from 9:30 am yesterday; the 6.0 coupon at 9:30 am +3 bps from yesterday’s close and +29 bps from 9:30 am yesterday.

At 10 am September pending home sales, expected +1.0% increased 7.4% from August.

Source: TBWS

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