Cogito

US Growth Data and Yield Curve

Posted in Uncategorized by qmarks on October 29, 2009

yield

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.

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