Date: September 13, 2019
U.S. Retail Sales Increase More Than Forecast on Autos, Web
“U.S. retail sales advanced in August by more than forecast as Americans hit auto showrooms and kept shopping online, sending Treasury yields higher and signaling consumers will continue to buoy an economy beset by risks from trade and global weakness. The value of overall sales rose 0.4% from the prior month after an upwardly revised 0.8% increase in July, Commerce Department figures showed Friday. The median estimate in a Bloomberg survey called for a 0.2% advance. Sales in the closely watched “control group” subset — which some analysts view as a more reliable gauge of underlying consumer demand — increased 0.3%, matching projections. The measure excludes food services, car dealers, building-materials stores and gasoline stations. Treasuries tumbled following the report, pushing the 10-year yield to the highest since early August. Spurred by a resilient labor market and income gains, the consumer remains the chief source of firepower for economic growth that’s slowed amid fragile global demand, uncertainty surrounding trade policy and lackluster factory output. The report suggests another solid quarter of household consumption, which grew in the April-June period at the fastest pace since 2014. In their effort to preserve the longest-running U.S. expansion, Federal Reserve policy makers reduced their benchmark interest rate by a quarter point in July. They’re projected to lower it again next week as a bulwark against the possibility that sluggish global demand and weaker trade spill over into the domestic economy more broadly.”
Pound Set for Best Week Since May as Brexit-Deal Hopes Resurface
“The pound headed for the biggest weekly advance since May against the dollar after reports of U.K. politicians softening their stance on Brexit rekindled optimism about a potential deal. Gilts fell as demand for the safety of government debt waned. Sterling was set for a fifth week of gains versus the euro, the longest winning run since 2016, after the Times reported that the Democratic Unionist Party, an ally of the ruling Conservative Party, would accept a new agreement to replace the contentious Irish backstop. The pound, which also benefited from broad dollar weakness, extended its rally even after some DUP members pushed back against the news. The news “was denied a bit later on but seems to have caught markets by surprise,” said Valentin Marinov, the head of G-10 currency research at Credit Agricole. “I think markets smell there could be a deal after all.” The pound climbed as much as 1.1% Friday to $1.2476, the strongest level since July 25, and was up 1.4% in the week. It appreciated 0.7% on the day to 89.11 pence per euro. The yield on 10-year gilt climbed as much as seven basis points to 0.74%, its highest since July.”
China Backs U.S. Farm Purchases as Trade Talks Atmosphere Warms
“China said it is encouraging companies to buy U.S. farm products including soybeans and pork, and will exclude those commodities from additional tariffs, in the latest move to ease tensions before the two sides resume trade talks. The Commerce Ministry’s announcement on Friday follows a move earlier this week to exempt a range of American goods from 25% extra tariffs put in place last year, as the government seeks to lessen the impact from the trade war. China didn’t specify the amount of purchases of pork and soybeans, which are key exports from agricultural states important for President Donald Trump’s 2020 reelection bid. Equity markets have rebounded in recent days as both Trump and Chinese leader Xi Jinping sought to lower tensions that are clouding the outlook for the world’s biggest economies. Adding to the pressure on Beijing, China is facing pork shortages that are pushing up prices during a holiday period, prompting officials to ration sales in some areas. Still, major differences on the substantive issues that sparked the trade war remain. “It is hoped the U.S. side can keep goodwill reciprocity with China through practical actions,” Global Times editor-in-chief Hu Xijin said in a tweet shortly before the move was announced.”
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