The Atlanta Fed’s GDPNow model maintains its growth estimate for the second quarter of 2025 at 2.4%. This figure remains unchanged from the previous update on July 18. The projections for key GDP components have seen minimal alterations following the latest data from the US Census Bureau and the National Association of Realtors.
Upcoming Gdp Model Update
An update to the GDPNow model will occur on Tuesday, July 29. The Bureau of Economic Analysis is scheduled to release the initial GDP estimate for Q2 2025 on Wednesday, July 30, at 8:30 AM Eastern Time. This release will provide more detailed insights into the economic performance during the quarter.
We view the consistent 2.4% growth estimate as a sign of economic resilience, especially considering that actual growth in the first quarter of 2024 was a much lower 1.3%. This suggests a potential re-acceleration that the market may not be fully pricing in. Our focus should therefore be on positioning for a surprise around the official data release on July 30.
With the final update and the official release creating a known event risk, we expect a rise in implied volatility. Historically, the CBOE Volatility Index and options premiums on major indices swell in the days preceding such key data points. We believe selling volatility through strategies like short strangles or iron condors could be profitable if the final number lands close to expectations.
Market Reactions To Gdp Data
A GDP print significantly above this estimate could challenge the market’s current expectations for Federal Reserve rate cuts, which the CME FedWatch Tool shows are still priced in for later this year. In this scenario, we would consider purchasing near-term call options on sectors sensitive to economic strength. A sharp miss to the downside would likely accelerate rate cut bets, making put options on indices an attractive position.
The Citigroup Economic Surprise Index for the U.S. has recently hovered near zero, indicating that data has been coming in very close to economists’ forecasts. This context suggests the market may be complacent, making any significant deviation from the 2.4% estimate more impactful. We can therefore consider low-cost, long-volatility positions to capitalize on an unexpected outcome.
