For the week of December 17 – 21.
Friday started on a negative tone with the release of disappointing industrial production and retail sales data out of China. Industrial production came in below consensus at 5.4 percent year-over-year, vs. consensus and previous of 5.9 percent. Retail sales came in at 8.1 percent year-over-year, vs. consensus of 8.8 percent and previous of 8.6 percent, which is the weakest pace since 2003. In Europe, both France and Germany also released weak PMI numbers that were below expectations.
November retail sales in the United States rose 0.2 percent, beating expectations of 0.1 percent, while retail sales ex-auto dealers, building materials and gasoline stations rose 0.6 percent in November. Nine out of thirteen retail categories rose for the month of November, while eleven categories contributed to the retail sales growth in August. Unfortunately, the decent United States retail sales data wasn’t enough to offset the sluggish market sentiment.
Data releases in Canada this week include existing home sales, manufacturing, consumer price index, retail sales and GDP data. Releases out of the United States this week include housing starts, existing home sales, consumer spending, personal incomes, durable goods orders, GDP, and University of Michigan sentiment readings. Although the markets are still not fully priced for a hike, the Federal Reserve is forecast to increase the overnight target range by another 25bps at the conclusion of the Federal Open Market Committee on Wednesday. Attention will be on the Federal Reserve statements, particularly on neutral rates and inflation forecasts.
Both US and Canada government yields are trading flat to 1bps lower with S&P futures lower (-7.3). The Canadian dollar is trading flat against the US dollar this morning, today’s expected range is 1.3334 – 1.3434.