US Retail Sales blew through expectations and set equity markets on fire. The headline US Retail Sales number was a huge increase of 9.8% for the month, which translates into a 27.7% increase for the year! The great economic news was also further improved by further falls in Weekly Jobless Claims, while the Philly Fed Report and Empire State Manufacturing, both posted healthy gains. The economic news was enough to push equity markets to record highs and force the 10 year bond yield back to 1.53%, while the US Dollar softened further.
The EUR traded 1.1970, as French and German Inflation data came in as expected, while the GBP pushed up to 1.3790. Australian employment continued to show building strength, as the headline rate fell to 5.6%, while the participation rate improved. The AUD Dollar rallied to 0.7750, while the NZD pushed up to 0.7170, aided by the softer reserve.
The Fed’s Beige Book reflected the economic recovery and noted rising input costs were being passed on to the consumer, reflecting in rising PPI and CPI. The fiscal and monetary stimulus are doing their work and worries about inflation, debt and deficit are for another day.