The US economy grew by 2.8% in Q2, beating market expectations of 2%, according to the latest BEA data. This growth represents an acceleration from the 1.4% increase in the first quarter.
The rise in real GDP for Q2 is primarily due to an uptick in private inventory investment and increased consumer spending. However, a downturn in residential fixed investment partially offset these gains. The BEA notes that this advance reading is based on incomplete or potentially revisable data, with a second estimate due on August 29th.
Durable Goods Orders Fall Significantly
Durable goods orders dropped by 6.6%, contrary to the forecast of a 0.3% increase, driven mainly by a significant decline in transportation equipment. Excluding transportation, new orders saw a 0.5% rise.
The stronger-than-expected GDP figures reduced US rate cut expectations by two to three basis points. Nevertheless, markets still anticipate a 25 basis point rate cut at the September 18 meeting, with additional quarter-point cuts expected on November 7 and December 18.
US Dollar Remains Stable
The US dollar index saw a slight increase but remains calm ahead of Friday’s Core PCE data. The DXY is fluctuating around the 200-day SMA and is expected to maintain this range until 13:30 UK time tomorrow.
