Robust retail sales intensify inflation concerns

The Daily Shot: 16-Apr-24
The United States
Canada
The United Kingdom
The Eurozone
Europe
Asia-Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Rates
Food for Thought



 

The United States

1. Retail sales surged last month, topping expectations.
 

 
Online sales registered their largest increase since January 2022.
 

 
Vehicle sales declined.
 

 
Here are the March changes in retail sales by sector.
 
Source: @GregDaco  
 
This chart shows nominal and real core retail sales.
 

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2. The Atlanta Fed’s GDPNow estimate for Q1 GDP growth jumped after the retail sales surprise.
 
Source: Federal Reserve Bank of Atlanta  
 
Here is the Oxford Economics’ GDP tracker.
 
Source: Oxford Economics  

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3. Following the robust retail sales report, Treasury yields and the US dollar rose further. Robust US consumption may sustain elevated inflation levels.
 

 

 
Source: @financialtimes   Read full article  
 
Short-term market-based inflation expectations are rebounding
 

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4. The NAHB index of homebuilder sentiment was roughly unchanged. The measure of expected new home sales edged lower (2nd panel), …
 

 
… as mortgage rates climb.
 
Source: Mortgage News Daily  

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5. The first regional manufacturing survey of the month (from the New York Fed) showed no signs of recovery.
 

 
Factories continue to reduce workers’ hours, …
 

 
… and fewer companies expect to be hiring in the months ahead.
 

 
More firms are reporting rising costs.
 

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6. Rail freight activity slowed in recent days, dipping below last year’s levels.
 


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Canada

1. Existing home sales edged higher last month.
 

 
2. The loonie has faced downward pressure as US inflation and corresponding rate hike expectations surpass those in Canada.
 

 
3. Higher commodity prices could boost Canadian corporate earnings relative to the US.
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  


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The United Kingdom

1. The pound has weakened against the US dollar as indicators of inflation surprises diverge.
 

 
Source: @TheTerminal, Bloomberg Finance L.P.  

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2. Gilt yields continue to rise amid a global sell-off in bonds.
 

 
3. The minimum wage in the UK is now one of the highest in the world.
 
Source: Resolution Foundation   Read full article  
 
Lowest-paid jobs have seen the fastest wage growth in recent years.
 
Source: Resolution Foundation   Read full article  

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4. Frequent changes to UK fiscal rules are increasing market uncertainty, potentially keeping bond yields elevated.
 
Source: The Economist   Read full article  


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The Eurozone

1. Euro-area industrial production increased in February from the lowest level since the 2020 COVID shock.
 

 
The currency bloc’s industrial production is less volatile when Ireland is excluded.
 
Source: @DanielKral1, @OxfordEconomics  

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2. German policy uncertainty is well above that of Europe.
 
Source: Martin Ademmer, Bloomberg Economics   Read full article  
 
3. Fewer euro-area banks are tightening lending standards.
 
Source: @skhanniche  
 
4. Economists downgraded their forecasts for this year’s CPI in Germany and Italy, …
 

 

 
… but increased their estimates for Spain’s inflation.
 

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5. The euro continues to move lower relative to the US dollar, …
 

 
… as indicators of inflation surprises diverge.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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6. The Greek economy has been outpacing that of Germany.
 
Source: @DanielKral1, @OxfordEconomics  


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Europe

1. The STOXX 50 is testing support at its 50-day moving average.
 

 
2. Here is a look at EU member states’ government debt projections for 2034 vs. 2023.
 
Source: EC   Read full article  


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Asia-Pacific

1. The yen continues to hit multi-decade lows vs.USD.
 

 
2. The South Korean won is oversold relative to the US dollar.
 

 
3. Australian bond yields are climbing.
 


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China

1. China’s Q1 GDP report topped expectations.
 

 
Source: Reuters   Read full article  
 
2. Growth rates in industrial production and retail sales were softer than expected last month.
 

 

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3. Home prices continue to fall.
 

 
4. Hong Kong-listed stocks are down this week.
 

 
5. Hong Kong’s existing home prices continue to sink.
 

 
6. USD/CNH (offshore yuan) is at resistance.
 

 
7. The US-China short-term rate differential continues to widen.
 


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Emerging Markets

1. EM currencies have been struggling in recent days.
 

 
The Brazilian real (a sharp selloff):
 

 
The Mexican peso rally is reversing, with USD/MXN now at its 50-day moving average.
 

 
The Vietnamese dong continues to decline.
 

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2. Rising currency volatility could weigh on EM currencies and boost domestic bond yields. (2 charts)
 
Source: BCA Research  
 
Source: BCA Research  

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3. India’s wholesale price inflation edged higher last month.
 

 
The trade deficit narrowed more than expected as imports dropped.
 

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4. BofA’s private clients continue to buy EM debt.
 
Source: BofA Global Research  


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Cryptocurrency

1. BTC/USD is oversold with support around $57.8K, although upside momentum has weakened.
 
Source: @StocktonKatie  
 
2. The proportion of total bitcoin mining revenue compared to BTC trading volume has persistently declined after prior halvings. This may suggest that miner influence on price action has waned.
 
Source: @dlawant  
 
3. Bitcoin’s correlation with select altcoins has fallen to historic lows in Q1, relative to the same period in the prior two years.
 
Source: @KaikoData  
 
4. Crypto funds saw minor outflows last week led by Ethereum-focused products. (2 charts)
 
Source: CoinShares   Read full article  
 
Source: CoinShares   Read full article  

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5. Hong Kong conditionally approved its first spot bitcoin and ether ETFs, …
 
Source: @crypto   Read full article  
 
… giving bitcoin a temporary boost.
 
Source: Oxford Economics  


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Commodities

1. Gold continues to surge.
 

 
Gold has been supported by US fiscal concerns.
 
Source: Goldman Sachs; @MikeZaccardi  

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2. Copper keeps rising as well.
 

 
3. The rally in coffee futures continues.
 

 
4. Rice futures surged as Indian rice exporters expressed concerns about their ability to transport the commodity.
 

 
Source: The Economic Times   Read full article  


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Energy

1. Oil implied volatility is rising, …
 

 
… with risk bias to the downside.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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2. Technicals suggest Brent oil is overbought, although not yet extreme compared to prior peaks.
 
Source: Longview Economics  
 
3. According to Goldman, the crude oil rally has been driven in part by improved global economic growth.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
4. This chart shows OPEC+ fiscal breakeven oil prices by country.
 
Source: Longview Economics  
 
5. Numera Analytics expects oil prices to remain supported by an extension of voluntary OPEC cuts and weak shale supply growth.
 
Source: Numera Analytics (@NumeraAnalytics)  
 
6. Equity investors are more upbeat about oil prices than the oil market.
 
Source: Goldman Sachs; @MikeZaccardi  


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Equities

1. Key US indices dipped below their 50-day moving averages after the strong US retail sales report sent Treasury yields higher.
 

 
2. Sentiment has deteriorated sharply.
 
Source: CNN Business  
 
Here is Goldman’s “panic index.”
 
Source: Goldman Sachs; @dailychartbook  
 
3. Fund flows also show unease.
 
Source: BNP Paribas; @WallStJesus  
 
Equity flows are entering a seasonally weak period.
 
Source: Deutsche Bank Research  

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4. VIX and VVIX (vol of vol) surged in recent days.
 

 
The VIX curve inverted.
 

 
Here is how the S&P 500 performs after the VIX curve inverts.
 
Source: Chris Murphy, Susquehanna International Group  

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5. This chart shows how the negative correlation between stocks and the dollar reversed last year.
 

 
6. The S&P 500 has experienced multiple expansion despite high real bond yields.
 
Source: BCA Research  
 
7. Sector index futures’ average daily volume (ADV) on the CME Exchange remains robust.
 
Source: CME Group  


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Rates

1. The 10-year Treasury yield is holding support with improving momentum.
 

 
2. Investor sentiment on Treasuries remains very bullish.
 
Source: BCA Research  
 
3. This chart shows the composition of Treasury debt outstanding.
 
Source: @WSJ   Read full article  


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Food for Thought

1. Tesla and BYD EV sales:
 
Source: @chartrdaily  
 
2. Ivy League college costs:
 
Source: @wealth   Read full article  
 
3. Retirement trends in the US by education level:
 
Source: ¬†Federal Reserve Bank of San Francisco   Read full article  
 
4. The US increasingly relies on immigrants to grow its labor force.
 
Source: @foxjust, @opinion   Read full article  
 
5. Timeline of reported disappearances in Mexico:
 
Source: The Economist   Read full article  
 
6. Cheapest beach getaways in the US:
 
Source: DIVEIN Travel  
 

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