Stocks Mixed As Retail Sales’ Growth Pushes Treasury Yields Higher

All Eyes On Treasury Yields

S&P 500 futures are moving back and forth in premarket trading as traders wait for additional catalysts.

Right now, the most interesting developments are taking place in the U.S. government bond market. The yield of the 30-year Treasuries has recently made an attempt to settle above the 2.10% level while the yield of 10-year Treasuries is trying to get above 1.32%.

Treasury yields are boosted by inflation expectations as investors believe that prices will move higher after the new round of U.S. stimulus. The recent rally in the oil market should also contribute to higher inflation.

Typically, higher yields put some pressure on stocks. However, the current situation is unique, and the stock market has so far managed to ignore the developments in the bond market. Meanwhile, higher Treasury yields provide support to the U.S. dollar, and stronger dollar continues to put pressure on gold and silver.

Oil Resumes Rally

Cold weather in Texas led to supply disruptions and provided additional support to oil prices.

Yesterday, the oil market pulled back a bit as forecasts called for warmer weather, but this pullback was quickly bought by traders willing to bet on the continued decline in crude inventories.

Currently, WTI oil is trying to settle above the $61 level. If this attempt is successful, it will gain additional upside momentum which will be bullish for oil-related equities.

Retail Sales Grew By 5.3% In January

The U.S. has just provided Retail Sales report for January. On a month-over-month basis, Retail Sales increased by 5.3% in January compared to analyst consensus which called for growth of just 1.1%. Excluding Autos, Retail Sales grew by 5.9%.

Strong growth of Retail Sales indicates that consumer activity is healthy so prices may begin to increase soon.

Later, the U.S. will release Industrial Production and Manufacturing Production reports. Industrial Production is projected to increase by 0.5% month-over-month in January while Manufacturing Production is expected to grow by 0.7%.

For a look at all of today’s economic events, check out our economic calendar.