On Wednesday, US equity futures increased as traders were optimistic about corporate earnings reports, with the S&P 500 rising after a two-day decline. Meanwhile, bonds remained flat overnight, but lost some ground after the GDP report showed higher than expected inflation components, implying that the monthly PCE data might also come in hotter than anticipated. Jobless claims dropped to 230k compared to a forecast of 248k, and continuing claims fell by 3,000 to 1.858m. However, the Q1 GDP growth was only 1.1%, which was significantly lower than the expected 2%, with a slowdown in inventory and homebuilding weighing down growth. Pending home sales also fell by 5.2% in March, with 28% of homes selling above list price and 200,000 fewer listings than November. The underlying price data in the GDP report could increase the odds of slightly hotter inflation, as well as in tomorrow’s PCE price report. Finally, Treasury Secretary Janet Yellen warned that failing to raise the debt ceiling would result in an economic catastrophe, raising the cost of borrowing and making future investments more expensive.