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U.S. consumer prices unchanged; retail sales fall again

15 Juillet 2017

U.S. Treasurys saw early buying Friday, driving yields firmly lower, as a weak report on retail sales and inflation raised fresh questions about the pace of the Federal Reserve's plans to normalize monetary policy by lifting rates and shrinking its asset portfolio.

The fourth straight below-forecast reading on the consumer price index in June pushed inflation further away from the Fed's 2-percent goal.

The core rate rose 0.1% on the month compared with an expected increase of 0.2% with the year-on-year rate unchanged at 1.7% which was in line with expectations. Year-on-year CPI has been softening steadily since February, when it hit 2.7 percent.

USA consumer prices remained unchanged in June, indicating inflation may remain stuck below the goal of the US central bank for a long time. Inflation came-in flat versus an expected.2% gain, and retail sales fell by.2% against the expectation for a.1% gain.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Earlier this week, Chair Janet Yellen reiterated that the Fed would be watching the incoming inflation data particularly closely over the coming months". Markets' attention has been focused squarely on economic prints out of the USA economy of late, and as we discussed two weeks ago, this has done Dollar bulls very few favors as data continues to print below expectations.

The home currency resumed a tad higher at 64.57 from weekend closing level of 64.60 at the Interbank Foreign Exchange (forex) market.

The 12-month chart below shows how the recent two prints marked a stalling of the relentless uptrend previously.

How Many Nuance Communications Inc. (NASDAQ:NUAN)'s Analysts Are Bearish?
The total number of shares percentage held by insiders is about 5.63% while the number of Shares % held by institutions is 75.5%. The software maker reported $0.21 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.25 by $0.04.

The energy index declined again in June, falling 1.6%, including a 2.8% drop in the price of gasoline.

"Grocery prices have actually declined in the past year, but the cost of takeout and eating out has risen sharply, perhaps reflecting the impact of minimum wage increases in many states", MarketWatch noted. The gap between Canada's 2-year yield and its USA equivalent narrowed by 1.2 basis points to a spread of -14.4 basis points, its narrowest since August 18.The narrower spread comes after the Bank of Canada raised interest rates on Wednesday for the first time in seven years. MSCI's gauge of equity performance in 47 countries .MIWD00000PUS gained 0.65 percent, and its world index .WORLD rose 0.64 percent.

Chandler said there's not much on the near-term horizon that will drive the dollar higher, but it could still adjust if the Fed raises interest rates at the end of the year.

Dow Jones closed up by 0.41 percent, S&P 500 ended up 0.47 percent, Nasdaq finished the day up by 0.59 percent.

"They (Fed comments) add to our conviction that no further Fed hike should be expected for the rest of the year, which should prove reassuring for markets concerned about excessive tightening risk globally", Mizuho's head of euro rates strategy Peter Chatwell said. It earlier fell to 2.279 percent, its lowest since June 30. After initially falling below 2.3%, the 10-year yield climbed back above that level, reflecting strong forces that are still pushing up on yields, analysts said.

Drugmaker AstraZeneca AZN.L continued Thursday's slide, down 1.6 percent due to uncertainty around reports that CEO Pascal Soriot was preparing to leave the company.

U.S. consumer prices unchanged; retail sales fall again