Treasuries fell, pushing two-year note yields to the highest level since 2011, after the U.S. added more jobs than estimated in November, reflecting strength in the world’s largest economy as global growth slows.
Third-quarter GDP rose 3.5%, surpassing the median expectation of 3.0% on Bloomberg, and pulling the average growth rate up from 1.25% in the first half of the year up to 2% over the first nine months of the year. In the details, consumption rose 1.8% in Q3 just shy of the 1.9% rise expected, but a noticeable pullback from a 2.5% spending pace in Q2.
The GDP report was unusually boosted by trade in the third-quarter. Typically, exports add and imports drag from the report. The net contribution from both sides of the ledger was 1.3% and the highest reading since the second-quarter of 2009.
What’s likely adding to investors’ nervousness is whether the latest reading for retail spending marks the end of the near 45-degree rise since March 2009 that coincides with the onset of the bull market.
Given the recent performance of GBP/USD the forex markets seem to be veering towards the U.S. raising interest rates first, but there's still a chance that the Bank of England could pip the U.S. Federal Reserve to the post.