Flash: Lukewarm QE tapering rumors permeates market – Deutsche Bank

FXstreet.com (Barcelona) - Taking a brief look at yesterday's markets, we saw more of a 'goldilocks' data scenario for both fixed income and equities as the numbers were not too hot to intensify QE tapering fears but not too cold to doubt the prospects of the recovery.

Indeed whilst the US Q1 GDP was revised down to 2.4% from 2.5% earlier, the underlying details of the report were rather encouraging and put growth on a more solid footing in the quarter. Personal consumption was actually revised slightly higher (3.4% vs. 3.2% as first reported), although the BEA credited motor fuel consumption for the increase.

Furthermore the Q1 inventory build was reduced to $38.3B from $50.3B and this lowered the inventory contribution to growth from 1.0 ppts to 0.6 ppts but a leaner inventory position is more constructive for current quarter production. Elsewhere initial jobless claims rose 10k to 354k last week but several states only reported estimated numbers due to the Memorial Day holiday. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “The 4-week average stands at 347k, which is little different to a month ago.”