US GDP Misses But With Caveats

* Real GDP surprisingly declines -1.4% annualised (cons +1.0%) but the weakness is exacerbated by falling inventories, most notably wholesale trade (mainly motor vehicles) and retail trade (notably, "other" retailers and motor vehicle dealers). These are likely particularly volatile with offsetting swings in subsequent quarters.

* Nevertheless, personal consumption was still softer than expected at 2.7% vs 3.5% consensus.

* Countering the implication that domestic demand was softer than expected was a surge in imports that drove the second highest drag from net trade of -3.2pps. That in part was implied by the jump to the new record deficit in March released yesterday, with the surprise here being that it looks to have also been real demand rather than simply a price-driven nominal story.

* These caveats see half of the 0.35% drop in BBDXY on the release reversed whilst front-dated Tsys move back near session highs from prior to the release.