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Market Commentary

Equities declined while Treasuries sold-off as markets weighed the slower economic growth and greater-than-expected inflation data in the advance first quarter gross domestic product (GDP) report. Treasuries were little changed overnight but began to sell-off in the morning. The sell-off continued as the advance GDP data was released, but as markets digested the report, yields declined. Yields edged lower in the morning and moved mostly horizontally throughout the afternoon, ending 4-7 bps higher as markets look ahead to Friday's release of the Federal Reserve’s (Fed's) preferred inflation measure.

Q1 GDP grew at an annualized rate of 1.6%, missing expectations of 2.5% and growing at a slower rate than Q4's 3.4% increase. The weaker-than-expected advance reading reflected slower growth in consumer spending, exports, and government spending, while imports and residential fixed investment accelerated. The personal consumption expenditures (PCE) price index rose 3.4% in Q1, following a 1.8% increase in the prior quarter. Excluding food and energy, core PCE price index also accelerated rising 3.7% after Q4's 2.0% increase.

Initial jobless claims declined 5K to 207K for the week ending April 20, down from the prior week's unrevised level of 212K. The four-week moving average fell 1.25K to 213.25K during the week. Continuing claims decreased 15K to 1.781M in the week ending April 13, while the insured unemployment rate remained unchanged at 1.2%.

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