What is it?
The GDP measures the market value of goods, services, and construction produced in the US during a quarter. It is the broadest measure of economic activity in the US. The data is released by the Department of Commerce each quarter. The GDP is one of the most watched indicators on the map, because its rate of change tracks the actual pace of economic activity growth or shrinkage for all sectors of the economy. Generally, bond investors prefer to see steady, moderate growth in the economy. If the economy heats up too quickly, fears of inflation begin to rise, and the threat of interest rate hikes rises with them.
Also part of the GDP report are several key components, including consumer spending, investment/savings, and inflation indexes. Each of these components, particularly the inflation index, is of primary importance to bond investors.
The GDP is almost always a market mover. This is particularly so when the numbers are significantly different from what analysts had been expecting.
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