Treasuries are rallying this morning 1 to 3 bps across the curve seemingly driven by weakness in global equity markets. US equity futures declined in sympathy with the sell off in Asia and Europe, which was sparked by disappointing earnings from the Chinese tech company Tencent.
US retail sales for the month of July came in better than expected at 0.5% vs the consensus median of 0.1%; while June’s number was revised down to 0.2% from 0.5%. This increase in spending should reinforce the optimism of small business owners that was expressed in yesterday’s NFIB survey. The one caveat to this current buoyant mood is that wage growth remains tepid at best. Last Friday’s real average hourly earnings reading showed a decline of 0.2% year over year, which for an economy that relies heavily on consumer spending, could result in slower growth going forward.
Hafizan Hamzah
Director, Investment Management Group