Daily Market Commentary 18th February 2021

US retail sales spiked 5.3% for January, much higher than expected and 7.43% for the year. This surprised markets and turned negative equity markets, briefly positive. The consumer news supports the recent spike in Bond Yields and will translate into the CPI numbers. Strong consumption may be at least partially attributable to the massive monetary and fiscal stimulus injected by the Federal Reserve and Government. This will boost cost of living pressures and inflation. The rise in bond yields has supported a stronger US Dollar, with the EUR falling to 1.2040, while the GBP slipped to 1.3850. US Industrial and Manufacturing also showed signs of recovery, no doubt demand driven.

The recovering US economy and economic data confirming this, has lead to the rebounding US Dollar and commodity prices, which have supported the trade exposed economies. The commodity driven currencies have been beneficiaries, although the rising reserve pushed the NZD back below 0.7200, while the AUD attempted to hold 0.7750. EU new car registrations collapsed by 24%, reflecting the savage lock-downs imposed on the economy by fearful and clueless politicians.

Local markets will await the Australian Employment data and the Fed Minutes later in the US trading day.