Originally published by Rivkin Securities
The US Dollar Index declined -0.37% on Friday night along with U.S. treasury yields following key economic data that slightly missed expectations. Month-on-month advanced retail sales in April rose +0.4% missing forecasts for a +0.6% although this does follow an upward revision in March from -0.2% to +0.1%. Year-on-year consumer prices rose +2.2% after a +2.4% through until March, slightly below estimates of +2.3% while a core measure that excludes food & energy rose +1.9%, missing the anticipated +2.0% increase. Real average hourly earnings, which are adjusted for inflation, rose +0.4% year-on-year to April from +0.3% previously.
Although the data is slightly disappointing having missed estimates, it is in no way disappointing with the US consumer remaining supportive of the economy. This coupled with expectations for a rebound following a dip in growth for Q1 and a healthy labour market leaves the FOMC on track to hike rates when they next meet in June.
Both the two & ten-year treasury yields declined -5.3 and -6.7 basis points respectively following the miss in economic data. Forward looking measures for inflation declined with the five-year breakeven rate decreasing from +1.825% to +1.760% and the ten-year breakeven rate decreased from +1.909% to +1.865%. Equities were mixed with the Nasdaq 100 closing +0.22% higher while the S&P 500 lagged finishing -0.15% lower.
Across in Europe the euro gained +0.67% as German GDP (QoQ Q1) rose +0.6% in line with analyst forecasts, up from +0.4% previously. On Tuesday we’ll get a look at the Euro-zone more broadly with GDP data due to be released at 7:00pm Sydney time. Equity markets rose broadly with the Euro Stoxx 600 closing +0.31% higher, as did the DAX up +0.47% and CAC 40 gaining +0.41%.
Looking ahead this week there is plenty of data for investors to focus on, today we’ll get a look at Chinese retail sales, fixed asset investment and industrial production around midday AEDT. Tuesday will see the released of preliminary GDP figures for Q1 for the Euro-zone followed by U.K. consumer prices and euro-zone ZEW economic survey. On Wednesday U.K. unemployment figures will be released followed by Euro-zone consumer prices. Thursday will focus on Japanese GDP and Australian unemployment and Friday will round off the week with Canadian CPI and Euro-zone consumer confidence.
Locally the S&P/ASX 200 index was lower on Friday, down -0.70% however we can expect to start trade on a slightly stronger note this morning with ASX SPI200 futures up +6 points or +0.10% at the close of trade on Friday.
Data releases:
· Australian Home Loans and Investor Loans (MoM Mar) 11:30am AEDT
· Chinese Retail Sales, Fixed Assets Ex. Rural Assets and Industrial Production (YoY Apr) 12:00pm AEDT