Fear recedes
The US isn't falling off any kind of economic cliff. The latest data on consumers and manufacturing all beat estimates by a healthy margin.
- Philadelphia Fed business outlook for August 16.8 versus 9.5 estimate
- US Empire manufacturing for August 4.8 vs 2.0 estimate
- US July advance retail sales +0.7% vs +0.3% expected
As a result, the bid in bonds reversed. Earlier US 30-year yields fell below 2% for the first time ever and sank as low as 1.94%. But they're all the way back to the figure now.
Other risk assets are less cheerful. The problem here is the Fed. Every data point that beats estimates trims the chance of a rate cut. Certainly there are some people at the Fed looking at the best 7-month stretch in core retail sales and asking themselves why they should be cutting rates.
