It was bad news as US retail sales data cast doubt over the underlying strength of the US economy, sinking global equities.
Traders slashed their expectations for further interest rate rises from the US Federal Reserve after retail sales in December fell short of expectations, and fuelled a rally in bond prices, causing yields to crumble.P 500 fell 1.6 per cent and the Dow Jones Industrial Average 1.8 per cent. Australian stocks bucked this trend, rallying on the prospect of the Reserve Bank of Australia nearing its policy pauseThe implied peak in the US Fed funds rate was pared back to 4.
The US Producer Price Index declined 0.5 percent in December, giving the Fed more room for policy flexibility in the face of slowing inflation.St Louis Fed president James Bullard said: “We’re almost into a zone that we could call restrictive – we’re not quite there yet,” he toldAnd Loretta Mester from the Cleveland Fed also advocated for further monetary tightening.
US casino revenues fell 2 per cent in November, according to Macquarie, to $US3.9 billion. However, the brokers’ own US Contractors’ Optimism Index was up 5 points to 42 points in December, reflecting improving supply side dynamics for new construction.
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