Atlanta Fed's GDPNow model dragged down further to -2.1% for Q2

Jul. 01, 2022 3:05 PM ETiShares 20+ Year Treasury Bond ETF (TLT)By: Max Gottlich, SA News Editor54 Comments

Wooden blocks with the word GDP and up and down arrows. An unstable economy in the country. Financial measure of the market value of all the final goods and services produced in a specific period.

Andrii Yalanskyi/iStock via Getty Images

The Atlanta Fed's GDPNow model estimate for Q2 real GDP growth has been revised down further to -2.1% on Friday vs. -1.0% on June 30.

That would be an even bigger contraction from the first quarter, which saw real GDP contract 1.6%. Note that back-to-back quarters of negative GDP growth is defined by some as a technical recession.

Fears of a recession are setting in as Treasury bonds (NASDAQ:TLT) have been catching a bid since mid-June, with the 10-year T-bond yield dipping 8.5 basis points to 2.88% as of shortly before 3:30 p.m. ET. That compares with its cyclical peak of 3.48% on June 14. On the short-end of the yield curve, the 2-year is also falling nearly 9 basis points to 2.83%, down from 3.43% on June 14.

The Atlanta Fed's downbeat estimate comes as a string of poor economic data rolls in. June's manufacturing data, for example, continues to wane amid supply chain constraints as well as a drop in new orders.

"The Fed has effectively pushed the economy into a recession, trigger waves of layoffs and making cost of living higher via debt costs," macro analyst Adam Tumerkan wrote in a Twitter post Friday in response to the updated GDPNow.

Previously, (June 30) Atlanta Fed lowers Q2 GDPNow estimate to negative territory.

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