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U.S Consumers Stay the Course, Fed Spec Support the Dollar

Posted by Joseph Trevisani on Aug 13, 2013 11:16:00 AM

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Though the Americans showed but a modest interest in consumption in July, markets have judged it sufficient to keep the Federal Reserve on course to begin curtailing its quantitative easing program in September.

Retail sales rose 0.2 percent following a 0.6 percent increase in June that added 0.2 percent upon revision, according to the Commerce Department in Washington, D.C. Economists in the Bloomberg survey had forecast a 0.3 percent increase.

The dollar rose 4.5 percent against the euro to 1.3234 after the release and though its immediate reaction versus the yen was just 15 points higher, the U.S. currency has gained 2.4 percent against the yen since yesterday's low at 95.93.

The yield on the benchmark U.S. 10-year Treasury rose as high as 2.72 percent after closing at 2.62 percent yesterday and was trading at 2.70 percent as of publication, 8 basis points to the good. The yield was 1.62 percent in early May; before the Federal Reserve began to public contemplate ending its quantitative easing program.

Retail sales without automobile purchases rose 0.5 percent in July, a bit more than the 0.4 percent predicted. The prior month was revised 0.1 percent higher to 0.1 percent.  The 'retail sales control group' the category that matches the consumption component of the GDP calculation increased 0.5 percent in July after a 0.1 percent gain in June. It was the strongest gain since last November

Equities initially fell with the Dow down as much as 77 points and the Nasdaq Composite off 21 points. As of writing both have moved into positive territory the Dow up 67 points and the Nasdaq up 12 points at 1:37 pm.

 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets

Charts: Bloomberg

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