- Strong U.S. retail sales support bond sell-off and stock markets.
- JPY slightly stronger overnight after reaching new lows over the weekend.
- Swedish CPI in focus after the latest Riksbank meeting.
The U.S. S&P500 closed the day marginally higher helped by an upside surprise in U.S. retail sales. The gain was primarily driven by healthcare and financials, while telecom, materials and utilities saw losses.
The surprisingly strong retail sales in April combined with upward revisions to March and February mean that U.S. private consumption is tracking above 2% q/q AR growth in Q2 despite significant fiscal tightening. This further supports our view that the current soft patch in the U.S. will be temporary and relatively shallow.
Most Asian equity indices outside China are up this morning, even the Japanese Nikkei despite the gains in the JPY overnight. However, China’s stocks fell the most in two weeks as concerns about the slowdown in Chinese growth and government tightening on the property market to curb house prices weighted on equities.
In the bond markets U.S. treasury yields ended the day close to the highs over the weekend after an initial decline in early trading, as the upside surprise to U.S. retail sales supported the case for a tapering of Fed’s QE this year.
In the FX markets JPY has gained slightly against USD after declining to new lows over the weekend. JPY is trading at 101.6 against USD at the time of writing, down from a high of 102.0. The Scandi currencies have been broadly stable against EUR overnight.
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