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The next two days will reveal the latest data on inflation and the economy

Commentaries & Views

Over the next two days market participants, analysts, and members of the Federal Reserve will get the latest information on the state of our economy and the current level of inflation. At 8:30 AM EST, the BEA (U.S. Bureau of Economic Analysis) will release the advanced estimate for the 1st Quarter Gross Domestic Product (GDP). The second estimate which will include preliminary data on corporate profits will not be released until May 25.

The Federal Reserve Bank of Philadelphia released the “First Quarter 2023 Survey of Professional Forecasters” on February 10. The forecasters anticipate higher growth and a stronger labor market in 2023 concluding that, “On an annual-average over annual-average basis, the forecasters expect real GDP to increase 1.3 percent in 2023, up from the projection of 0.7 percent in the survey of three months ago.”

Predictions for tomorrow’s GDP report vary but the latest model provided by the Federal Reserve Bank of Atlanta says that “The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 1.1 percent on April 26, down from 2.5 percent on April 18.” This forecast clearly shows a contraction in the estimates from approximately one week ago.

On Friday the BEA will release the latest data on inflation vis-à-vis the PCE price index. Early forecasts expect to see the core PCE increase by 0.3% month over month and An increase of 4.5% year-over-year.

These two reports will be the last components of economic data that the Federal Reserve will use to make their final decision at next week’s FOMC meeting. The meeting will begin on Tuesday, May 2, and conclude the following day. A statement from the Federal Reserve will be released immediately after the conclusion of the meeting followed by a press conference by Jerome Powell ½ hour later.

The dollar is trading lower today by 0.40% and the index is fixed at 101.19.

The combination of elevated inflation, a contracting economy, and elevated interest rates continue to be highly supportive of gold futures. Also, as of this writing, the Congress is expected to vote on a bill to raise the debt ceiling. As of 5:37 PM gold futures basis, the most active June 2023 contract is trading down $5.70 and fixed at $1998.80. Gold traded to an intraday high of $2020.20 but broke back below $2000 during trading in New York as yields firmed and traders switch their focus to the reports which will be released on Thursday and Friday.

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