The upward revision in the third reading on Q3 GDP to 5.0% makes it the strongest quarter since 2003.
The US dollar is cheering the GDP report, gaining 30-40 pips across the board. The gains helped the US Dollar Index break the 90 level for the first time in 8 years.
I think the trend of dollar strength is likely to continue through year-end because momentum is more important than fundamentals in late December. The market is excited about a quarter that began nearly 6 months ago and ended in September. Data that’s relevant to the current situation is less perky and today’s durable goods report for November is downright is worrisome.
Core orders — non-defense capital goods orders ex-air — were flat in the month compared to +1.0% expected. The data point now hasn’t grown in 5 months. That metric is a key leading indicator for business investment and if the US economy was really turning the corner, it would be rising. Last week’s Markit services PMI is another real-time indicator that shows cause for concern.
