US indicators weak, Fed funds expectations retreat, USD falls

•       US indicators weak, Fed funds expectations retreat, USD falls

–      US retail sales unexpectedly decline in June, small business optimism falls

–      Fed funds rate expectations retreat, USD falls vs most currencies

–      Today’s trend depends on Yellen

•       China GDP, retail sales, IP, FAI beat expectations; stocks don’t care

–      Q2 GDP is +7.0% vs expected 6.8%, indicating stimulus measures starting to work

–      But stocks are lower anyway as market thinks maybe govt will ease off

–      AUD, NZD both higher = tracking economy, not stocks

•       Bank of Japan holds pat

–      Lowers FY16 inflation forecast but keeps FY17 forecast unchanged

–      Wait till formal revision of forecasts in October

•       Market waiting for Yellen’s comments today

–      Said on Friday that “I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate...” But once or twice?

•       Today:

–      UK: Unemployment for May expected to decline, average earnings rise = GBP-positive

–      Sweden:  Minutes of July Riksbank meeting

–      Canada:  Bank of Canada expected to cut rates 25 bps = CAD-negative

–      US: Industrial production for June expected to rebound; Empire State manufacturing index for July expected to improve