US GDP growth disappoints, below expectations in Q2

According to the advance estimate released by the Bureau of Economic Analysis showed, the Real GDP growth in the United States increased at an annualized rate of 1.2 percent on quarter in the three months to June of 2016, following a downwardly revised 0.8 percent growth in the first three months of the year and well below market expectations of a 2.6 percent expansion. Consumer spending was the main driver of growth while investment slumped and inventories fell for the first time since 2011.

“Consumer spending growth was the sole element of good news” in the latest GDP figures, said Gregory Daco, an economist at Oxford Economics. “Weakness in business investment is an important and lingering growth constraint.” Mr. Daco and other economists also expect growth to pick up the pace in the third quarter, but the weak first half means 2016 is likely to come in below an already disappointing trend.

Weekly Closing Wrap

Equity Markets: The pan-European STOXX 600 index rose 0.7 percent after closing nearly 1 percent lower the day before. The index ended with its third straight week of gains. stocks were little changed on Friday. Investor sentiment was also dented by a slower-than-expected growth in U.S. gross domestic product. Six of the 10 major S&P 500 indexes were lower, with the energy sector's 1.26 percent decline making it the top loser.

Currency Markets : The dollar last traded at 103.33 yen, down 1.9 percent, having hit a 2-1/2 week low of 102.705 yen after the BOJ's decision to expand only its purchases of stock market-linked ETF paper. The euro was also 1.7 percent weaker at 114.59 yen.

Commodities Markets: Brent's expiring front-month contract, September, was at $42.27 a barrel down 1 percent on the day and 15 percent on the month. WTI's most-active contract, September, rose 5 cents to $41.19 a barrel, after slipping earlier to below $41 the first time since April. It was on track for a monthly loss of 14.7 percent, its biggest since July 2015.

Treasuries: Benchmark 10-year Treasury notes were up 10/32 in price for a yield of 1.475 percent after hitting a two-week low of 1.472 percent.