Insights 
VT 
The Atlanta Fed GDP tracker shows an uptick, with GDP now at 2.6%, up from 2.5%. The advance GDP report will be released on 30 July.
Recent data from various US agencies have affected the forecasts. The nowcasts for second-quarter real personal consumption expenditures growth increased from 1.5% to 1.6%. Real gross private domestic investment growth improved from -11.9% to -11.7%.
Forecast For Government Expenditures Growth
Additionally, the forecast for second-quarter real government expenditures growth rose from 2.0% to 2.3%. These figures suggest changes in economic activity in several areas.
These figures reflect a slight improvement in the projected pace of economic growth for the second quarter in the United States, based on incoming data. The marginal upward adjustment in the GDP forecast, from 2.5% to 2.6%, comes ahead of the official advance GDP report later this month. It’s worth noting that these updates stem from revisions in consumer spending, business investment, and government expenditure – each of which plays a different role in shaping expectations for traders analysing forward movements.
The increase in real personal consumption expenditures, even if only by 0.1 percentage points to 1.6%, tells us that household spending may be sustaining a bit more momentum than previously estimated. While modest, this adjustment hints that consumers are maintaining a degree of confidence, despite broader concerns. For market participants, this isn’t likely to drive large-scale shifts alone, but any firming in consumer activity often finds its way into pricing assumptions for future inflation paths.
Private domestic investment, while still showing contraction, has had its forecast revised less negatively – from a drop of 11.9% to 11.7%. This still reflects considerable weakness, especially in equipment and construction-related categories. But with the adjustment softening slightly, it suggests some sectors may be stabilising, or at least not deteriorating as sharply as expected. From our standpoint, this frames how forward-rate biases could adjust. If expectations for capital spending begin to flatten out, it might influence positioning in parts of the curve more sensitive to corporate balance sheets and future capex cycles.
Impact On Government Spending Forecasts
Meanwhile, the upward bump in government spending forecasts – now at 2.3% from 2.0% – adds a layer of support to overall growth estimates. Federal, state, and local budget flows contribute in differing ways, but this collective rise indicates that public sector demand remains active. That can help offset drag from other sectors, such as housing or equipment investment. While not typically the driver of core inflation, government outlays can have secondary effects, particularly when combined with persistent service-sector support.
Taking all of this into account, what we’re seeing is a shifting blend of inputs that could slightly tilt the perceived balance of risks in some short-dated interest rate instruments. It’s also enough to prompt small recalibrations along the belly of the curve. We find that a consistent approach — focusing on how marginal revisions map against prior implied expectations — continues to offer the clearest route.
Accordingly, we should be watching not just the headline prints but also the second- and third-tier components. These are where the small changes gather weight, and where pricing inefficiencies tend to linger longest. A narrow adjustment in consumption or investment flow could affect discounting behaviour more than headline growth rates would at first suggest.
With the GDP report due at the end of the month, any further tracking adjustments in the weekly updates from regional Fed models will matter. Specifically, they could support or undermine the prevailing narrative around whether the economy is cooling gradually or maintaining unexpected resilience. That narrative, in turn, shapes how curve steepeners or flatteners perform over both short and intermediate horizons.
Carefully monitoring these incremental movements helps us formulate relative value desks’ reactions as flows begin to reposition. As expectations stabilise, we may start to see spreads revert or widen, depending on how the momentum in each of these categories is perceived.
