Tuesday, June 14, 2016
This morning we received a healthy slice of U.S. economic data: Retail Sales for the month of May rose 0.5 percent, while May Import Prices went up 1.4 percent and Exports up 1.1 percent. Each of these measures were improvements over what analysts had been expecting.
For Import Prices, the 1.4 percent figure was double what was expected; this was also the case for April when retail numbers reached 0,7 percent from an expected 0.3 percent. Export Prices up 1.1 percent was also higher than expected, and signify strength in trade for both the U.S. and its main trading partners. Stripping back Retail Sales numbers to exclude autos and energy prices - which can fluctuate considerably month to month - we see 0.4 percent, about in-line with expectations.
Turning our attention to the Control Group, we also see a better-than-expected 0.4 percent. The previous month was modestly revised upward from 0.9 percent to 1.0 - and this is the highest figure we've seen since February 2014.
Taken together, this data indicates economic strength which should support a Q2 rebound analysts had been expecting, especially prior to the weak non-farm payroll jobs report late last week which suggested the wheels had suddenly come off the domestic economy. This also suggests the Fed has other data to consider beyond jobs that may indicate economic strength enough to signal another quarter-point increase in interest rates.
Speaking of the Fed, the latest FOMC meeting begins today, and following the two-day meeting we'll hear from Chairwoman Janet Yellen tomorrow afternoon. No one expects a rate hike this month, but much attention will be paid to the language she uses regarding the Fed's attitude about possibly raising in July.
Among the Fed's myriad concerns are economic events in the Eurozone - as of now, the "Brexit" vote stands around 55 percent wanting to stay. However, now that the German 10-year note has dipped into negative return territory for the first time in history, it's possible we could see British voters' confidence waver. We've already seen the U.S. treasury bond fall under 1.6 percent, largely due to wariness of the EU drama.
Finally, crude oil prices , both on the WTI and Brent measures, are down more than 1 percent ahead of today's market opening. We saw how oil prices gaining had a positive affect on the market recently; as of now, futures are still down.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.