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GDP Strong as Housing Market Shows Signs of Weakness

Yields moved higher all week before edging slighly lower following the release of the second quarter GDP report on Friday. The report indicated that U.S. economy notched a 4.1% growth rate in the second quarter, the strongest quarterly reading since 2014.  While the economy is certainly performing well, the number was boosted by some one-time impacts.  For example, net exports were the highest since 2013, partially due to a surge in soybean exports intended to beat the new tariffs.  For the remainder of the year, economists expect the economy to grow at a rate slightly less than 3%. 

The other major economic indicators released during the week were much less bullish, as both existing and new home sales declined during the month of June.  Despite the economy's strength, it appears that the housing market is weakening substantially as rising mortgage rates and home prices have negatively impacted affordability.

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