US Growth Data and Yield Curve
3rd Quarter Growth is announced: 3.5% .
Growth comes from “consumer spending side” through the car purchases with the help of Cash for Clunkers program.
Also expenditure on housing projects jumped t0 23.4% (annualized). Moreover, government’s tax credit for first time home buyers supported housing rebound.
Government expenditure is also increased,posing a higher deficit. Government has 2 options to finance its deficit, either borrow more, through issuing bonds, t-bills or privatization. Since privatization is not an issue, I expect the interest rates to increase by the Q1/2010.