One of the key publications in the U.S. today was data on retail sales in April. This information together with data on industrial production disappointed investors.
In an environment of greater market uncertainty, even the US economy is disappointing, and hard data also show deterioration in the United States. According to the data released today at 14:30, retail sales fell 0.2 percent in April in relation to the previous month. The market consensus assumed an increase in sales by 0.2 percent. Thus, the data is clearly disappointing. 6 of the 13 main categories showed a decrease in monthly terms. The largest withdrawal in the sales volume was recorded in dealers of cars and car parts (-1.1 percent) and in stores with building materials, where the decline was 1.9 percent. Sales in electronic stores and equipment decreased by 1.3 percent.
Meanwhile, industrial production in the US fell in April by 0.5 percent. compared to March. It was the largest drop in industrial production since May last year. Such disappointing data influenced the US debt market and the interest rate market.
As a result, investors started buying American debt quite quickly. The bond price is approaching the high from the end of March. This means a drop in yields and thus an increase in concerns about the state of the US economy and the possibility of interest rates cuts by the Federal Reserve of the United States. Federal funds futures indicate a valuation at 2.040 percent at the end of the year. The effective Fed funds rate at the beginning of the week was 2.38 percent, which means a full valuation of one rate cut by the end of the year.
The increase in investors' fears after the publication of the data not only showed a rise in US debt prices, but also decreases on the American stock exchange. Stock indices have set new session holes. On the other hand, the US dollar, together with the valuation of ever-greater chances for lowering interest rates, slightly depreciated, which allowed to stop the depreciation of the euro or the British pound.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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