The new trading week has kicked off with a series of disappointing economic reports out of North America. US retail sales slowed significantly from a year ago (3.1% vs previous 3.9%) as retail sales over month disappointed (0.2% vs street 0.7%). The Empire State Manufacturing Index staged a severe and surprising drop (-20.0 vs street -1.9 and previous +5.7). Canada housing starts were disappointing today (229K vs street 248K).
US index futures moved up a bit on the news and have started to slip back again. Currently Dow Futures are down 0.2% and NASDAQ Futures are up 0.2%. Investors may be seeing this as giving the Fed room to cut interest rates. The US 10-year treasury note yield is steady near 4.30%. The USD is sliding, however, falling 0.1%-0.3% against the Loonie, Euro, Aussie, Pound and Yen. Gold is holding steady near $3,000/oz. Crude Oil is up 1.2%, while Copper is up 0.2%.
The Fed is expected to keep the Fed Funds rate unchanged at Wednesday meeting. Investors may closely scrutinize FOMC member forecasts on GDP, inflation, employment, and interest rates, as well as comments in the statement and press conference, for any indications of how recent cuts to government spending and the introduction of tariffs against key U.S. trading partners— which have led to trade retaliation—may impact the economy, inflation, and interest rates this year.
Over the weekend, China reported in line retail sales at 4.0%, and better than expected industrial production (5.9% vs street 5.3%). Other notable economic news this week includes Canada consumer prices on Tuesday, Bank of England and Swiss National Bank meetings on Thursday, and Canada retail sales on Friday.
There are a number of US earnings reports this week which could shed some light on the state of the economy and consumer spending, including Nike, FedEx, Micron Technology and homebuilder Lennar all on Wednesday, followed by cruise line Carnival on Thursday.