For weeks, traders have been scaling back how many rate cuts they expect from the Fed amid a string of resilient economic data. Economists surveyed by Bloomberg predict gross domestic product likely cooled to around 2.5 per cent in the first quarter, with the figures still suggesting persistent inflationary pressures.

“Tomorrow’s pivotal GDP report comes as market participants hope for a soft number that would lead to rate cuts sooner rather than later,” said Jose Torres at Interactive Brokers. “We expect a stronger-than-projected figure. It would be great for revenue growth prospects, but bad for the timing and extent of rate cuts.”

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US 10-year bond yields rose four basis points to 4.64 per cent.

Buoyed by strong economic data and persistent inflation, traders have sought higher yields for holding government bonds as they revise down their expectations of Federal Reserve rate cuts, according to Fawad Razaqzada at City Index and Forex.com. However, higher yields and rates signal the cost of servicing US federal debt is becoming burdensome, he noted.

Interest rates staying elevated longer, along with economic uncertainty and geopolitical turmoil have lessened the appeal of some of the stock market’s cheapest strategies.

Investors this month have pulled some $US200 million out of value-based exchange-traded funds, according to data compiled by Bloomberg Intelligence. In contrast, growth stocks have attracted more than $US3 billion in inflows — despite a shaky stock market that’s raised concerns of more downside to come. That diminished interest in cheap stocks comes on the heels of lacklustre performances of common value products.

To Katrina Dudley at Franklin Templeton, valuations are fair — therefore companies need to continue to deliver on earnings growth.

“For the market overall, we’ll be watching guidance for the remainder of the year closely,” said Matt Palazzolo at Bernstein Private Wealth Management. “While it’s good to know how companies did from January to March — it’s more important now to have a sense for managements’ expectations for the balance of the year.”

Bloomberg