The retail sales figures and the Philadelphia Fed manufacturing index published yesterday surprised the market in a positive manner. In the case of retail sales, some economists had already pointed out the recovery of car sales.
However, the data was much better than expected, with August retail sales rising 0.7% against a forecast decline of -0.8%. At the same time, the Philadelphia Fed index shot higher to 30.7, well above the 17.7 forecasted.
This promising data contrasts with the general market sentiment of the previous day when it moved in the risk-off mode. The event was caused by fear of a global slowdown of the economy after the weak data of industrial production and retail sales in China.
Therefore, the market sentiment seems to be changing from one day to the next. Dominated by uncertainty and, above all, very dependent on the published economic figures, both the leading indicators and the employment data without forgetting those of inflation. The markets moved along this same line, like a real roller coaster with abrupt changes in both directions.
With these very optimistic indicators, the US Treasury bond yields moved upwards quickly, reaching the levels they had before the inflation figure was published. Tnote reached 1.35%, and for this reason, the North American stock indices moved abruptly to the downside before recovering all or almost all the lost ground as the end of the session approached.
USA30 lost almost 1% after the publishing of the retail sales figures and ended the day down 0.30%. Indeed, the closes are increasingly moving further away from the 34.750 resistance zone. The movement is still lateral with a slight downward bias but with a buying interest in corrections. Everything will depend on what the Federal Reserve reveals in the meeting that it will hold next week.
Elsewhere in the currency market, traders went into a dollar-buying frenzy. With a strong dollar and treasury yields rising, gold slumped, experiencing the most significant drop in recent weeks.
Following this fall, Gold moved away from the trading range of $1780/ounce and $1790/ounce, dropping around $40 and approaching the first support zone of $1730/ounce. Its future evolution will most likely depend exclusively on the US dollar and/or the yields of US Treasury bonds.
Sources: Bloomberg.com, reuters.com