US: All eyes on advanced estimate of Q3 GDP - Rabobank

Analysts at Rabobank suggest that even though the market is still preoccupied with digesting yesterday’s ECB meeting, the advanced estimate of US Q3 GDP will be the most interesting data report of today.

Key Quotes

“The consensus forecast is for a 2.6% rise in GDP. Recent monthly indicators have been fairly decent, yet the impact of hurricanes Harvey and Irma remains a big uncertainty as these storms temporarily disrupted activity in a number of economically significant states. Industrial production declined, for instance, amid disruptions in oil- and gas industries, whereas investment in structures – such as oil rigs – is likely to have declined as well.”

“On the other hand, we’ve already seen the first signs of a rebound in the consumption of durable goods and auto purchases. It remains however really uncertain whether the statistical surveys were able to fully grasp the extent of the initial decline and the subsequent bounce-back in activity. We can imagine that replying to questionnaires isn’t top priority for those living and working in affected areas. This also implies that the risk to the market is asymmetrical. If the figure turns out to be better than expected, the explanation will be that the economy performed well despite the hurricanes. If we’re going to see bad numbers, the weakness will be rationalised, or maybe even trivialised, as being the direct result of the storms.”

“Finally, just before we’re heading off for a well-deserved weekend, the University of Michigan will release its final October estimate of US Consumer sentiment (the flash survey showed a stunning improvement to 101.1). One component that’ll be getting our particular attention is the question whether US consumers think the stock market will rise further in the upcoming 12 months. The September survey indicated that 61% of the respondents answered positively, close to the highest level on record.”