PREVIOUS TRADING DAY EVENTS 27 April 2023

Announcements 

Real Gross Domestic Product GDP increased at an annual rate of 1.1 in the first quarter of 2023, as per the Advance GDP QQ figure that was reported yesterday. However, it was less than expected. This increase is attributed to increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investments.

The figure is lower than the previous one, showing that U.S. economic growth slowed down more in the first quarter. This was due to businesses liquidating inventories in anticipation of weaker demand later this year amid higher borrowing costs.

Leaner inventories mean secondquarter GDP is on a solid foundation, said Chris Low, chief economist at FHN Financial in New York. Of course, what is built on that foundation depends on many things, including job and income growth as well as confidence and credit availability.

The Fed is expected to raise interest rates by another 25 basis points next week. It will probably be the last hike. There is currently a tight labour market, characterised by a 3.5 unemployment rate.

A U.S. recession is likely to start in the second half of this year, said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. It should be mild, however, as consumer balance sheets remain strong, and the tight labor market will discourage layoffs.

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