The strong growth of the US economy is changing sentiment in the bond markets

The release of macroeconomic data from the third quarter showed impressive momentum in the US economy. An economic expansion of 4.3% turned out to be the largest in the past two years, which was a significant surprise to market participants. Such results signal the robustness of the fundamental economic conditions in the United States.

The market reaction to the GDP data was quite pronounced. The price of long-term US bonds corrected upward, reflected in an increase in yields. The day of publication brought particularly interesting fluctuations – in the morning hours, we observed a decrease in yields, but before the market closed, bond returns rose again.

The most important indicator remained the yield on the ten-year Treasury bond, which reached approximately 4.165%. Comparing this result with the yields of European bonds, American securities show significant differences – they are 3 basis points cheaper than German equivalents and 2 basis points below British bonds of the same maturity.

The data on US GDP growth also influenced the shift in expectations regarding future Federal Reserve policy. The market reacted to this information, leaning more towards a scenario that is more restrictive for the currency. Expectations for the Fed's decision at the January meeting have been modified – instead of the previously expected four basis point cut, current forecasts indicate a smaller cut of about three basis points.