The US economy continued to show its incredible resilience with the release of an unexpectedly strong initial claims print and remarkably positive 1Q GDP revision. This week’s initial jobless claims (+239k) came lower than every single Street estimate on Bloomberg, registering the largest claims drop since October 2021. Furthermore, 1st quarter GDP was raised to 2% vs 1.4% from preliminary estimates on strong consumer spending and net export adjustments.

Combined with the hotter-than-expected inflation in Spain and Germany, bond yields saw a forceful repricing which took 2yr yields higher by +16bp on the day, December 2024 OIS higher by +23bp, terminal yields to 5.40% (highest since SVB collapse), and the 2/10s curve reinverting back through -100bp.

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