USD flows: USD and yields a touch lower after GDP

Stronger than expected Q4 GDP was accompanied by a weaker than expected GDP deflator, so the implications for Fed policy are unclear. However, the core PCE deflator was as expected at 2.0%, so in total the data may be seen as marginally on the strong side. There were generally solid contributions from most categories of expenditure. However, the initial market take has seen US yields and the USD edge a little lower, perhaps influenced by the modest rise in initial and continuing claims in the latest week, perhaps by the GDP deflator. But we would expect the Fed to see this data as being on the strong side, and risks should be towards higher front end yields and the USD.