US futures rose with European and Asian equities on positive Chinese economic data

Highlights:

Market Summary: Small caps led the markets higher yesterday, gaining 1.31%. Crude oil was also higher by 1.25%. Interest rates moved up, sending bond prices lower as the U.S. 10-year Treasury yield increased 2 basis points. Gold was also down on the day, falling -0.23%.

Economic Data: The top data release yesterday was retail sales. Retail sales increased 0.3% month-over-month. Ex Autos, they increased 0.7% month-over-month. The Philadelphia Fed Manufacturing Index was also released, coming in higher than expected at 17 versus 3.8. This is another indication that manufacturing should improve in the coming months. It appears that growth is not only stabilizing around the world, but also here in the U.S.

Retail: With retail sales increasing last month, one would expect to see the retail equity market sector outperforming the broad market. It was up relative to the S&P 500 yesterday, but the ratio of XRT to SPY still remains below a falling 200-day moving average. Maybe the negative revisions in the previous months have something to do with the lack of strength in the retail sector.

Small Caps: Small caps bounced against the broad U.S. equity market yesterday. The ratio recently broke below key support last week, but with yesterday’s move is back above this important level. Was the breakdown a fake out? If economic growth improves in the U.S., we would expect small caps to stage a comeback. For right now, the ratio remains below a falling 200-day moving average, implying a negative trend.

Bitcoin: Is Bitcoin about to move back to a positive trend against the dollar? The chart below shows bitcoin relative to its 40-week moving average. If the week ended today you would have a close above, suggesting a positive change in trend. The rally has already been impressive to start the year.

Chart of the Day: Real retail sales are below the peak since the last recession but have picked up considerably since the end of 2018. Currently, real retail sales are up 3.5% year-over-year.

 

Futures Summary:

 

News from Bloomberg:

The U.S. will sell 20-year bonds in the first half of this year to help fund a swelling budget deficit. Previously issued 30-year Treasuries with about 20 years left to maturity yield about 2.15%, suggesting the new debt will offer a big premium over comparable notes. It will probably draw more domestic buyers than global funds, which tend to favor shorter maturities.

Long-dated Treasuries dipped after the plan was announced. The dollar edged up. U.S. futures rose with European and Asian equities on positive Chinese economic data. The yuan rallied with the won and Aussie. Oil climbed with gold and most industrial metals.

A Bayer Roundup settlement is close after a surge in cancer claims, a court-appointed mediator said. Ken Feinberg is cautiously optimistic a deal can be done in about a month, saying the company may be facing over 85,000 claims—double the number it disclosed in September. Bayer agreed to mediation after losing three California trials. Shares nudged up in Frankfurt.

Rudy Giuliani's indicted associate Lev Parnas threw Rick Perry under the bus. In the second night of his two-part MSNBC interview, Parnas said the then-energy secretary told Ukraine's president he had to begin an investigation into Joe Biden and Burisma on Giuliani's bidding. On the trial front, Republican Senator Susan Collins may support calling witnesses after each side presents its case. Here's a look at Giuliani's tangled involvement with President Trump.

Schlumberger kicks off earnings for oil service firms, with expectations for a sharp slowdown in North America. CEO Olivier Le Peuch will be probed about the strategic review and implications for cash flow. Bloomberg Intelligence expects a slowdown will prompt the company to refine its operating strategy, including exiting some markets. Halliburton reports Tuesday.