Morning Miscellany

April 30th, 2014 9:38 am | by John Jansen |

The GDP printed well below expectations at 0.1 percent. Some have suggested that it is a backwards looking data point and Q2 data is improving so all will eventually be sweetness and light.  Others have suggested that the component pieces are worse than the headline. If you are a regular reader you know my anti ObamaCare fetish. I note that because the following factoid is not from me but from the street. Healthcare spending (aka ObamaCare) contributed 1.1 percent to the 0.1 percent gain. If you are in another sector of the economy that spending is a tax on you and reduced spending elsewhere. Some one else noted that the consumptions gains actually benefited from the bad weather as spending on utilities increased.

The yield curve is steeper in response to the number and to the upcoming Treasury refunding supply. The front end is also benefiting from a small reduction in the three year note. I have heard of hedge funds doing steepeners versus the belly and one trader mentioned insurance company selling of the back end. Against that background 5s 30s is 2 basis points steeper than I marked it at 600AM and rests now at 178.1. That spread closed Friday around 171.5


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