Market debates heated up last week with the influx of some US economic data. On the other hand, the concerns on overheating inflation was legitimate given the much stronger than expected headline and core CPI reading from the US. On the other hand, poor retail sales, and prior week's non-farm payroll data, gave a nod to Fed's patience approach. It would likely take some more months of data before judging whether inflation is there to last. In particular, could recent price hikes be embedded back into expectations, which feed back into more hikes. Volatility in the markets was high as a result. Yet, DOW and S&P 500 stayed comfortably, and healthily, in medium term up trend after the post CPI selloff. 10-year yield also failed to ride on the intra-week rally for an upside breakout. In the currency markets, Dollar's decline appeared to have slowed somewhat, but it's still vulnerable to more selloff, at least for the near term. While Aussie ended as the worst performing, it's overall development wasn't too bearish at all. |
