US economic data prompts Treasury yields to rise, USD/JPY also increases

Market Shift: From Inflation to Growth as Indicated by Soft CPI and Sinking Retail Sales

The market is slowly shifting its focus from inflation to growth, as indicated by softer CPI and sinking retail sales. Yesterday was a turning point, with these changes signaling a new direction. Today’s economic reports were mixed, with some good news and some bad news. Initial jobless claims were slightly higher than expected but still at historically low levels. Housing starts and the Philly Fed missed estimates, while import/export prices were higher than anticipated. Despite this, the Fed rate cut pricing decreased slightly, and Treasury yields rose, with US 2-year yields up 3.0 basis points on the day.

The USD/JPY has followed the movement in yields, seeing an increase of 31 pips to a session high at 155.21. Some market participants attribute these movements to position squaring and a market breather. However, it’s important to note that the S&P 500 futures are currently flat as the market continues to adjust to changing economic indicators and data points. As such, it remains uncertain how long this shift will continue or what impact it will have on the broader economy in the long run.

Overall, it seems that investors are becoming more cautious about inflationary pressures and are focusing more on growth prospects. While this shift may be beneficial for some sectors of the economy, such as technology or healthcare stocks that tend to perform better during periods of growth, others may struggle to adapt to changing conditions. It will be interesting to see how this trend plays out in the coming months and what implications it has for various asset classes.

In conclusion, while there were mixed signals from today’s economic reports regarding employment and housing starts among other factors, overall markets remained relatively flat as investors continued their shift towards growth prospects rather than inflation concerns. The USD/JPY pair saw significant gains following increases in yields on US treasury bonds while S&P futures remained unchanged as markets adjusted their focus towards changing economic indicators and data points.

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