WS #16510
The US economy demonstrated unexpected resilience in the third quarter, with Advance GDP growing at an annualized rate of 3.4%, surpassing the 3.2% consensus estimate. However, the accompanying Core PCE price index rose 2.5% year-over-year, exceeding the 2.4% forecast and signaling that inflation remains stickier than anticipated. This 'goldilocks' growth combined with persistent inflation effectively removes the prospect of imminent Federal Reserve rate cuts, likely supporting higher Treasury yields and pressuring valuation multiples for long-duration growth assets.
US Macro Resilience and Sticky Inflation
The US economy demonstrated unexpected resilience in the third quarter, with Advance GDP growing at an annualized rate of 3.4%, surpassing the 3.2% consensus estimate. However, the accompanying Core PCE price index rose 2.5% year-over-year, exceeding the 2.4% forecast and signaling that inflation remains stickier than anticipated. This 'goldilocks' growth combined with persistent inflation effectively removes the prospect of imminent Federal Reserve rate cuts, likely supporting higher Treasury yields and pressuring valuation multiples for long-duration growth assets.