U.S. Retail Sales figures released today for September were higher than forecast in all categories. Headline sales were +0.4% (+0.3% estimate) compared to +0.1% in August. Core Retail Sales (excludes autos) were +0.5% (+0.1% est.) while August sales were revised higher to +0.2% vs. the +0.1% originally reported. And finally, when excluding auto and gasoline, Retail Sales were +0.7%, outpacing the +0.3% estimate.
U.S. Weekly Jobless Claims for the week ending Oct 12th were 241k, lower than the 259k estimate. For the year, jobless claims have ranged between 198k and 250k. Today’s report lifted the long-term moving average for weekly claims to 236k.
Today’s better-than-expected economic data has lifted U.S. treasury yields which are now higher in all tenors. An outperforming economy undermines the argument for further rate cuts by the data-dependent Fed. The biggest yield gain is in the 20-year tenor, +0.068%, followed closely by the 10-year 0.065% gain.
Today the probability of a 25bps cut at the FOMC’s November meeting dropped to 92% from 94% yesterday. And the likelihood of a December cut dropped to 83% from 92% yesterday.
Earlier today the ECB cut its overnight policy rate to 3.25% from 3.50% in a widely expected move. It is the first time the ECB has cut in two consecutive policy meetings since 2011. And the trend may continue since there are nearly 100% implied probabilities of cuts at the ECB’s next three scheduled meetings.
Gold closed at a record high $2673.23/oz yesterday and has set a new all-time high today at $2689.11/oz.
The U.S. dollar index -s +0.14%, extending its winning streak to 14 consecutive days. Primary dollar gains vs. G10 are +0.29% vs. EUR, +0.19% vs. CAD, and +0.15% vs. JPY. Widening the view of the dollar’s performance against the group of majors has the dollar gaining 0.61% vs. ZAR, +0.51% vs. KRW, and +0.44% vs. MXN.
USD/MXN is +3.79% over four consecutive days and is approaching resistance at 20.1100 from early September.
