- US January retail sales 3.8% versus 2.1% estimate
- Canada January CPI +5.1% y/y vs +4.8% expected
- FOMC minutes: Participants' contacts reported continued widespread input cost pressures
- Iran nuclear negotiator says 'closer than ever' to agreement
- Blinken: We continue to see Russian units moving toward border, not away. Risk hit
- US NAHB housing market index 82 vs 83 expected
- BOC's Lane: We are alert to the risk of more-persistent inflation
- Lane: It's quite likely the BOC will have something to say about QT at next meeting
- Feds Kashkari: "Let's not overdo it"
- EIA crude oil inventories for the current week +1.121M versus -1.57M estimate
- US business inventories for December 2 .1% versus 2.1% estimate
- US January industrial production +1.4% vs +0.4% expected
- US January import prices 2.0% versus 1.3% last month
- Canada December wholesale sales +0.6% vs +0.6% expected
Markets:
- Gold up $18 to $1870
- US 10-year yields down 1.2 bps to 2.03%
- WTI crude oil down $0.56 to $91.52
- S&P 500 up 5 points to 4477
- NZD leads, JPY lags
The retail sales report was the main headline of the day but it didn't move the market much as the positive economic news was balanced by the potential for rate hikes to cool a too-hot economy.
In Canada, the CPI numbers were hot but not extraordinarily so. Again, the currency didn't react to the report and given the long stream of 'above expected' inflation numbers, I wonder if the market isn't pricing in upside 'surprises'.
Risk aversion kicked up with the US fanning the flames of fear on Ukraine again. After Blinken's comments, an Estonian official also said they see action in Eastern Ukraine as 'very likely' to add to that sentiment. That said, there were other headlines that emphasized de-escalation so there was something for everyone.
The Fed minutes were the late market mover as the USD slumped and US equities staged a comeback. The minutes are from the period before the CPI report but there wasn't any indication that officials were open to a 50 bps hike.
The Iran comment late also submarined a solid rally in oil. That didn't translate into a CAD move but it added to the overall tone of uncertainty and volatility.
The pound, AUD and NZD were best-positioned to take advantage of the dollar weakness and did just that but all still have some work to do to mount a challenge of last week's highs.
