Retail sales data comes back down to Earth

The overall tone of the market has remained positive despite the less than stellar U.S. Retail Sales data out this morning. The Euro(CME:ECM14) currency continued to trade lower following last week’s easing comments by the head of the European Cental Bank, Mario Drahgi.

 

Today we saw the retail sales data come back down to earth as the headline number was 0.1% vs. the expectation of 0.4%. However, this miss was muted to some extent due to larger than expected revisions to last month’s data (revised to 1.5% from 1.2%) making the miss in expectations actually net even (reuters-economy). The S&P 500 (CME:SPM14) and other equity indices have reacted as one would expect by trading very slightly lower and slightly higher, for the most part unchanged on neutral data.

 

The fixed income markets have traded higher as one may expect when the viewing the April data alone, but after considering the revisions, it would seem that the bond and note markets would decline as the indices remain slightly elevated. For the most part, we can expect the price action for the fixed income markets to move in the opposite direction of the equity markets. Fundamentally, as money goes into ‘risk on’ mode through the indices, it is normally withdrawn from the ‘risk off’ markets like the bonds, notes and other fixed income commodities.