Treasuries are rallying modestly this morning in response to the Bank of Japan coming in with a second bond purchase operation this week as well as a Core PCE reading that showed inflation coming in lower than expected. Equity markets are mixed this morning as investors continue to digest disappointing earnings from the likes of Twitter and Exxon Mobil.
As was mentioned above, second quarter GDP came in slightly lower than expected at 4.1% vs 4.2% on an annualized basis. However, this reading was the fastest pace of expansion since 2014 and the growth was boosted by an uptick in consumer spending, which hit 4.0%. Delving deeper into the numbers reveals that net exports contributed 1.06% as soybean shipments increased in an effort to get ahead of the retaliatory tariffs placed on the crop. As a result of this spike in trade, most economists expect this growth rate to be an exception rather than the rule going forward, with GDP growth expected to settle back in to its long-run rate.