Higher Retail Sales, Budget Deficits and Treasury Yields

Wells Fargo Research Team Wells Fargo

U.S. Review

Higher Retail Sales, Budget Deficits and Treasury Yields

Data released on Thursday showed the federal budget deficit was $23.2 billion in December and $225 billion through the first three months of federal fiscal year 2018 as concerns grew regarding a potential surge in Treasury issuance.
The consumer price index met expectations for headline growth, up 0.1 percent in December, and topped expectations for the core index, which rose 0.3 percent.
Retail sales growth posted another solid reading in December, suggesting a healthy contribution to GDP growth in Q4 from U.S. consumers.

Global Review

Strong Q4 Economic Data in Europe

Measures of business confidence have been overstating the strength of the Eurozone economy in 2017, but the disconnect between the “soft” and the “hard” data may be starting to narrow as industrial production in the Eurozone grew strongly in November.
Incoming data suggest that real GDP growth in the United Kingdom was solid in Q4. Brazilian Economy Continues To Pick Up Steam
The volume of Brazilian retail spending rose much more than expected in November.

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Wells Fargo Research Team

Wells Fargo

EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.

GBP/USD slips heading into the Thursday trading window

The Pound Sterling pulled back from four-year highs on Wednesday, weighed down by a combination of Bank of England dovishness and UK political uncertainty, even as the US Dollar weakened on soft labor market revisions.

Gold posts modest gains above $5,050 as US-Iran tensions persist despite strong labor data

Gold price trades in positive territory near $5,060 during the early Asian session on Thursday. The precious metal edges higher despite stronger-than-expected US employment data. The release of the US Consumer Price Index inflation report will take center stage later on Friday.

Bitcoin holds steady despite strong US labour market

Bitcoin briefly bounced from $66,000 to above $68,000 but slightly reversed those gains following Wednesday's US January jobs report. The top crypto is hovering around $67,000, down 2% over the past 24 hours as of writing on Wednesday.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

XRP sell-off deepens amid weak retail interest, risk-off sentiment

Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.