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US Stocks Rebound as Resilient Retail Sales Offset Inflation Concerns and Oil Range Trading
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Resilient US Consumer Spending and Elevated Inflation Concerns
Resilient US Consumer Spending Amid Elevated Inflation Raises Concerns
US stocks are clawing back intraday losses after investors digested a slew of macro and micro data, including January Retail Sales, the February NAHB housing survey, increased crude reserves, plus a slew of earnings results.
Coming fast on the heels of the January CPI release, today’s resilient retail sales reading, plus rebounding home builder sentiment, suggests that while inflation is moderating, consumers are still spending, hinting that lurking beneath all the doom and gloom somehow somewhere goldilocks could still be alive and kicking.
While underlying inflation remains elevated amid tight labor markets, further evidence that strong US consumer demand is likely driving upward pressure on prices stands as a concern. How the Fed will respond to this data is an open question.
But the robust retail sales could still prove to be the “sneaky” source of risk many were alluding to heading into the data underscoring the US economic resilience story, thereby bolstering the case for higher for longer.
Suffice it to say, the American consumer spending bonanza validated that concern (and then some), but at the same time, it should dispel the recessionary banter for now.
Oil Prices Steady as China Demand Rises, Global Inventory Surpluses Persist
Oil prices continue to range trade buttressed by an anticipated pick up in China demand yet offset by global inventory glutes.
The market’s built-in risk stabilizer, the closely watched equity-to-bond market correlation, continues to drive short-term FX trends. When stocks turn cold and yields turn hot, the dollar is in demand, while the opposite holds—suggesting “risk on, risk off” dictates the pace of dollar buys this week.
About the Author
Stephen Innescontributor
With more than 25 years of experience, Stephen Innes has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.
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