COMMODITIES for Thursday, April 17, 1986 : Traders Lack Enthusiasm

The signal from the Commerce Department on the nation’s gross national product was that the economy is in pretty good shape, but the reaction among traders of interest rate futures was a little short on enthusiasm.

The GNP grew by a 3.2% annual rate during the first three months of the year, although this number is preliminary and subject to correction. The 3.2% was larger than had been expected and much greater than anticipated by some traders of Treasury bond futures and other interest rate contracts.

If the economy is as healthy as the GNP would seem to indicate, there would be less reason for the Federal Reserve to cut the discount rate, a move the futures market has been counting on and a prime factor behind soaring bond prices.

“Treasury bond futures reacted to the GNP first thing,” said Gregg Chatterton, an analyst in New York with Prudential-Bache Securities. “But it held at the 104 level.”

The June delivery slipped to 104 4/32 points, but settled at 104 25/32, only 2/32 point below Thursday’s record high.

“We tend to think that the economy is a little weaker than the GNP shows,” Chatterton said.