US Real GDP Rises To 3.1% YoY, 10Y Treasury Yield Rises (Growth Stocks Continue To Rise Relative To Value Stocks)

The advanced US GDP report is out and it is a positive. YoY Real GDP growth rose to 3.1%.

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It’s a major win for the Trump administration, which surpassed its 3% growth goal.

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Consumer spending, which makes up two-thirds of the economy, was solid but still a slight disappointment as confidence was hurt last year by the stock market swoon.
Non-residential investment held up with a 6.2% gain and R&D spending surged, which could have positive impacts on productivity gains and wages.

It’s a Goldilocks report for the Federal Reserve: inflation near target, slower but solid growth. This reinforces the patient approach to interest rates.

Still, bond market bets that the Fed will be on hold all year are a bit less sure in the wake of the 4Q numbers. Yields on 10-year Treasuries rose in the wake of the report.

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The Russell Growth index spread over the Russell Value index resumes its rise.

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But the Russell 3000-1000 spread (size) actually has declined.

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