Daily Market Report 18/07/16

USD

U.S. retail sales posted a solid increase in June, another sign that consumer spending picked up in the Spring. Sales at retailers and restaurants rose 0.6 percent in May. Sales were up 2.7 percent from a year earlier. Spending on building materials and gardening supplies surged 3.9 percent, the most since April 2010.

The outlook was further supported by other data on Friday showing that industrial production recorded its biggest increase in 11 months in June on strong manufacturing and utilities output. With domestic demand strengthening, inflation is also steadily rising.

The consumer price index for all items rose 0.2 percent month-on-month, the same as in May, and the 12-month figure for all items was just 1.0 percent, mainly due to the plunge in energy prices last year. Price rises were strongest in housing rents, transportation and health care items and services

The upbeat data and a rally on Wall Street could allow the Federal Reserve to raise interest rates later this year. With concerns about persistently low inflation contributed to the U.S. central bank keeping interest rates unchanged last month.

The Index of Consumer Sentiment hit 89.5 in July's preliminary reading, the University of Michigan said Friday. Economists expected the preliminary July consumer sentiment index to hit 93, down slightly from 93.5 in June's final reading, according to estimates.

Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy," said Richard Curtin, the survey's chief economist. "Following the Brexit vote, it was mentioned by record numbers of consumers, especially high-income consumers." Well-off consumers felt the personal wealth losses that accompanied the post-Brexit stock rout. Nearly one in four households in the top third of incomes mentioned Brexit.

 

Key Announcements

09:15 - GBP - MPC Member Weale speaks