Good Thursday AM,

GDP revised to 1.3 from 1.1, jobless claims lower at 229k, and no debt deal yet.

Need I say more? The 10-yr has backed up to 3.78% and mortgage bonds are off a dozen basis points.

Yesterday’s minutes from the last FOMC meeting showed that Federal Reserve officials agreed unanimously to lift rates at their meeting this month but split on whether they would need to raise them in June. Some are ready to pause rate hikes if the economy evolves as they expect. Others, however, are worried that the economy and inflation haven’t shown more visible signs of slowing. Officials’ next meeting is June 13-14. The minutes illustrated how it could grow more difficult to maintain a strong consensus on rates in the coming months.

There is some optimism coming from House speaker Kevin McCarthy over the US debt ceiling impasse but that has not stopped the US from being put on credit rating watch, with Fitch Ratings warning the nation’s AAA rating is under threat. The rating agency said it may downgrade its assessment given the fast-approaching so-called X-date, though it said it still expects a deal. Downgrading the US credit rating is almost unimaginable, but if it were to happen, rates you are seeing today would be considered cheap…

The world economy, right?

Germany slipped into recession during the first three months of the year, as households cut spending in response to sharply higher prices for energy and food. With Europe’s largest economy now having shrunk for two quarters in a row, meeting the technical definition of a recession, the Eurozone may also have also contracted in the first quarter. The development doesn’t fundamentally alter economists’ views about the country’s immediate prospects, and any decline in output in the broader region is likely to have been modest. Still, a recession in the eurozone would deflate some of the optimism that has built up around the currency area’s economic prospects in recent months.

Too scary to think about but have to share this piece. Senior aviation-industry officials are alarmed by a string of serious incidents at U.S. airports this year, including a near-collision between a FedEx cargo plane and a Southwest Airlines jet in February. No one can say for sure what’s behind the near misses, but theories include strains stemming from the sudden bounceback in travel after the pandemic, fatigue from intense work schedules, lack of experience among newer pilots, distractions facing air-traffic controllers. or complacency after a 14-year streak without a fatal major airline crash.

Please remain safe and stay healthy, make today great!