Market wrap: minor movements only in FX – Westpac

Global markets saw only modest movements though US bond yields are slightly higher following solid retail sales data.

Key Quotes:

“There were only minor movements only in FX, bond and equity markets overnight as the Trump/ Putin summit dominated headlines. US equities and the US dollar finish the session slightly lower, while US bond yields are slightly higher following solid retail sales data. Oil fell 4% on Saudi Arabian supply.”

“The US dollar index is down 0.2% on the day. EUR rose from 1.1700 to 1.1725. USD/JPY fell from 112.50 to 112.10. AUD round-tripped from 0.7410 to 0.7442 and back. NZD similarly rose from 0.6770 to 0.6793 before slipping back to 0.6765. AUD/NZD fell from 1.0970 to 1.0940.”

“US retail sales rose 0.5% in June as expected, while the core measure – ex-auto and fuel – rose 0.3% (vs +0.4% expected) and the control group only 0.0% (vs 0.4% expected). However there were large upward revisions to the May numbers, suggesting strong retail activity for Q2. Business inventories rose 0.4% in May, as expected. NY Fed’s Empire survey of business activity of 22.6 did not pullback as much as expected (21.0) from the surge to 25.0 seen in June. Both new orders and shipments dipped in July suggesting some softening in activity in Q3.”

“The Trump Putin press conference drew criticism both from Democrats and Republicans, with John McCain stating that Trump’s performance in Helsinki showed that the summit had been a “tragic mistake”.”

“The IMF warned that the current trade tensions between the US and its major trading partners “is the greatest near-term threat to global growth”.”

“US 10yr treasury yields rose from 2.83% to 2.88%, helped by solid retail sales data, and 2yr yields rose from 2.58% to 2.61%. Fed fund futures yields continued to price 1 ½ more hikes in 2018.”