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Forexlive Americas FX news wrap 15 Apr: Stocks lower/yields w/ geopolitical &strong growth

Today, a combination of higher rates after stronger than expected Retail Sales for March and geopolitical fears on the back of the weekend military aggression from Iran on Isreal sent yields higher and stocks lower. The reports that Isreal would look to retaliate was also a catalyst for market action.

The March U.S. retail sales exceeded expectations with a significant increase of 0.7%, surpassing the predicted 0.3% rise. This performance marked a notable rebound from previous months, where retail sales were weaker. Sales excluding automobiles surged by 1.1%, which was more than double the anticipated 0.5%, and the prior month’s figure of 0.3%. The control group, which provides a more refined measure excluding volatile items like autos, gasoline, building materials, and food services, also showed strong growth at 1.1%, considerably higher than the expected 0.4%. Additionally, sales excluding gas and autos increased by 1.0%, up from a previous 0.3%. This uptick in March was the most substantial since January 2023. While the positive shift in retail sales could be partially attributed to an early Easter, which complicates seasonal adjustments, the data nonetheless represents a robust improvement, especially following a soft performance in the earlier months of the year.

The not-so-good was the regional Empire manufacturing data which came in weaker than expectations at -14.3 vs -7.5 expected. Over the next few weeks, there will be other regional indices which will paint a national picture for manufactuing.

Fedspeak was somewhat limited today with only one Fed official speaking (NY Fed Pres. Williams). This week will give Fed officials the final chance to speak on the economy /policy before the so-called quiet period ahead of the Fed rate decision schedule for May 1. The quiet period will start on Friday after the close, Although Fedspeak was limited today, there is a full schedule for the remainder of the week:

Monday, April 15

  • 8:00 pm: FOMC Member Daly Speaks

Tuesday, April 16

  • 9:00 am: FOMC Member Jefferson Speaks
  • 12:30 pm: FOMC Member Williams Speaks
  • 1:00 pm: FOMC Member Barkin Speaks
  • 1:15 pm: Fed Chair Powell Speaks

Wednesday, April 17

  • 2:00 pm: Release of the Beige Book
  • 5:30 pm: FOMC Member Mester Speaks
  • 6:30 pm: FOMC Member Bowman Speaks

Thursday, April 18

  • 9:05 am: FOMC Member Bowman Speaks
  • 9:15 am: FOMC Member Bowman Speaks (additional session)
  • 9:15 am: FOMC Member Williams Speaks
  • 11:00 am: FOMC Member Bostic Speaks
  • 5:45 pm: FOMC Member Bostic Speaks (additional session)

Today, John Williams, President of the New York Federal Reserve, expressed optimism about the U.S. economy, anticipating a growth rate of around 2% for the year. Speaking on April 15, 2024, he noted the robustness of consumer spending and highlighted positive contributions from the supply side of the economy. Despite recent data, Williams does not view the current inflation trends as a significant turning point. He acknowledged that the markets have adjusted expectations in light of the gradual progress on inflation. Emphasizing his flexible approach, Williams reiterated his commitment to being data-dependent in his policy decisions.

Looking at the markets, US stocks were sharply lower:

  • Dow Industrial Average fell -0.65%
  • S&P index fell -1.20%
  • NASDAQ index fell -1.79%.

The small-cap Russell 2000 declined by -1.37%.

In the US debt market, yields moved higher with the yield curve steepening:

  • 2-year yield 4.918%, +3.6 basis points
  • 5-year yield 4.625%, +9.0 basis points
  • 10 year yield 4.609%, +11.1 basis points
  • 30-year yield 4.726%, +12.3 basis points

In the Forex market, the USDJPY moved higher with the JPY being the weakest of the majors. The GBP was the strongest. The USD was mostly higher with only the points versus the GBP today.

Crude oil was lower for most of the day but is trading near unchanged in after-hours trading. Gold rose on safety concerns.. Bitcoin was not a safe-haven, but a “risk-off” instrument today. It is trading at $63,207. The low for the day reached $62,340. The high for the day was at $66,900.

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