Real GDP growth slowed slightly to 2.66% over the twelve months ending in Q3, compared to 3.04% for the previous quarter.
Real quarterly growth is essentially unchanged at 0.70% (2.8% annualized) in Q3.
Nominal GDP growth (gray below) slowed to 4.94% for the four quarters ending in Q3. Ten-year Treasury yields are lower, indicating that monetary policy remains supportive.
This is borne out by the Chicago Fed National Financial Conditions Index at a low -0.56.
Credit markets also signal strong liquidity, with Moody’s Baa corporate bond spread narrowing to 1.49%.
Conclusion
Real GDP growth is slowing gradually, as expected during a rate-cut cycle. Financial market liquidity remains strong, and there is nothing particularly concerning.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.