Bonds had another bad day Wednesday, with the 10-year Treasury yield climbing to 5.304%, its highest since 2002. While August inflation came in lower than expected, another datapoint released at the same time could be to blame. In its latest estimate of gross domestic product, the Bureau of Economic Analysis revised up real annualized GDP growth to an average of 2.4% in the first half from 1.8%.
Even more notable were upward revisions to nominal output. Specifically, gross domestic income is now an annualized $507 billion, or 1.6%, bigger. It grew 6.9% from a year earlier, revised up from 6.6%.
Nominal GDI is running ahead of nominal GDP, and both are growing at their fastest since 2006, excluding the pandemic years. Since the 1950s, nominal GDP and yields have been correlated. A simple regression maps the 6.3% nominal GDP growth through the second quarter to a 5.5% yield and 6.9% nominal GDI growth to a 5.8% yield.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing