US: The beginning of a key economic data - MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the bounce in crude oil prices certainly helped equity investor sentiment yesterday and all three major US equity indices closed at record highs for the first time since 1999 before the IT bubble burst taking the Nasdaq index to levels that have only recently been fully recouped.

Key Quotes

“Of course those record equity market closes don’t exactly sit well with the US fundamentals but a strong retail sales report today would greatly improve confidence over the outlook for growth in the second half of this year.

A solid report would also likely result in another slight shift in probability of the FOMC raising rates in December. That would no doubt provide some support for the dollar. Auto sales have already been released for July and suggest that consumer spending remained solid in July after expanding by 4.2% in Q2. However, we doubt the market reaction will be significant today – we estimate about a 60% probability of a December hike is priced, which is unlikely to shift notably at this stage even following a strong retail sales report. So don’t expect much in the way of a dollar move either.”