Next week’s GDP report to show a robust rebound in growth...but then what?: The MUFG Global Markets Podcast

MUFG's John Herrmann has revised his tracking estimate for 3Q-2020 real GDP growth to +35.5% q/q SAAR (previously, +39.7%). Although lower, the forecast is still higher than Bloomberg consensus of +32%. If John's forecasts prove accurate, they suggest that the level of real GDP may be fully recovered to its pre-pandemic level by July or August of 2021. That outcome would be 6 to 9 months sooner than the FOMC’s projections and the consensus estimates. Could such a rapid recovery to real GDP, to the unemployment rate, and to inflation influence investor sentiment and positioning to further steepen the 2s-30s Treasury yield curve towards 191bps over the medium-term? Fiscal stimulus remains the wild card but you might be surprised to learn that likely offers upside to these forecasts!?

In this episode, MUFG U.S. Rates Strategist, John Herrmann, takes listeners through the details of his tracking estimate for 3Q-2020 GDP. He discusses his more medium-term outlook and the role fiscal stimulus plays. He also explores the implications of those forecasts on his investment thesis, the 2s30s yield curve steepener.