Following today’s retail sales alleged blowout, to which treasury yields actually declined, comes a big GDP upgrade by the Atlanta Fed GDPNow Model vs. a smaller jump by the New York Fed Nowcast Model.
The difference between the forecasts is now a whopping 1.6 percentage points.
Atlanta Fed GDPNow
Latest forecast: 2.8 percent — May 13, 2016
“The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.8 percent on May 13, up from 2.2 percent on May 10. After this morning’s retail sales report from the U.S. Census Bureau, the forecast for second-quarter real consumer spending growth increased from 3.0 percent to 3.7 percent.”
New York Fed Nowcast
“The FRBNY Staff Nowcast for GDP growth in 2016:Q2 remains moderate at 1.2%.”
At least one of these is wildly off the mark.
Given the bond market’s reaction to today’s retail sales numbers, I suggest it’s more likely GDPNow missed the mark.
Bond Market Reaction
Bond yields rallied and gold was flat despite the fact the US dollar index rose 0.63%. Numbers as of 11:30 AM central.
- Retail Department Store Carnage: Amazon to Blame? Mish 12-Point Summation
- Retail Irony: Sales Jump 1.3%, Treasuries Rally
The bond market does not think much of today’s retail sales report, and neither do I.
Mike “Mish” Shedlock
Mish of course you will always support whatever model out there shows the lowest GDP growth. Even when you preferred the other model just last month and mocked your current favorite.
Really disappointing that you show such lack of integrity.
I explained my rationale
Why are bond yields lower?
Frankly, that surprised me.
By the way, looking at the numbers, I would have expected gold to get smashed and odds of a rate hike to increase.
None of that happened.
Please tell me why
Mish I can’t tell you why bond yields fluctuate on any given day. Gold just happens to be in a bullish posture right now in spite of the data. I own lots of gold btw.
I am not saying the economy is in good shape, but you never want to admit that your ongoing “official” recession calls have been wrong. It’s always the data being manipulated or corrupt models and Fed employees.
Methinks this person is baiting you and won’t do much in the way of backing up their big mouth.
Why are bond yields falling? Same reason stock prices are rising. TINA!
Maybe foreign flight capital is buying more than houses?
Looks like the luster of gloom and doom blogging is wearing thin as well?
Bond yields down? Stock prices up? TINA!
Where else do all the dollars exported over the years have to go?
Looks like the luster of Doom and Gloom blogging might be wearing a bit thin?
Fight the Fed if you will, but I’ll posit that the markets are not bigger than the Fed,,,,the Fed IS the markets. And if the markets don’t like that, they will be nationalized,,,straight up or by stealth.
Tony Bennett said:
You’ll so be eating your words.
Today’s inventory / sales report (march) still very recessionary.
When (not if) business decides to stop accumulating inventory … look out.
Tony Bennett said:
Agree with Jerry.