Good morning on this best day of the week, Wednesday, from your Hometown Lender,

Lots of economic news today as we race towards Friday’s jobs report.

ADP Payrolls came in dismally low (no private companies are hiring), GDP was negative (yes negative, and while we cannot call a recession yet as that requires two quarters of negative growth, the economy did recess last quarter), Chicago PMI came in low, and both total and core PCE were flat (inflation cooling). The only data that was stronger were income and spending and we know the spending was pulling forward purchases before tariffs hit. We will see what the rest of the week’s data reveals but if it stays equally weak, the Fed has reason to cut next week…

Despite the weak data, rates this AM are about where they were yesterday.

The 10-yr note has made a monster move lower over the last few days and is at 4.18%. Despite the data, bonds having a hard time this morning deciding whether to improve or not… started the day with a bit of gains before losing ground after the GDP data came in but then recovering from the worst levels of the day. It really sounds worse than it is though, just normal early morning movement that isn’t at risk of sending rates higher. In fact, I wouldn’t be surprised if we see a similar pattern to the last few days, where bonds start off the day a bit weaker but gain ground as the day goes on.

Negative GDP being the elephant in the room today needs some attention.

Here is an excerpt from the WSJ:

The U.S. economy contracted in the first three months of 2025, as businesses rushed to stock up on imports ahead of the Trump administration’s tariffs and consumer spending slowed. The Commerce Department said U.S. gross domestic product—the value of all goods and services produced across the economy—fell at a seasonally and inflation adjusted 0.3% annual rate in the first quarter. That was the first contraction since the first quarter of 2022. Consumer spending, the economy’s main engine, rose at a 1.8% pace in the first quarter, the smallest increase since mid-2023. Spending by the federal government fell as the Department of Government Efficiency cut jobs and contracts. But the main driver of the first-quarter contraction was Trump’s trade war. Net exports, the difference between what the U.S. imports and exports, subtracted nearly 5 percentage points from headline GDP. That was the biggest quarterly drag from net exports on record dating back to 1947. Businesses rushed to get ahead of tariffs that began to come into effect during the first three months of the year and were dramatically increased in the current, second quarter. Imports rose at the fastest pace since the third quarter of 2020, when the economy was reopening from pandemic lockdowns.

Stay safe and make today great!