The stock market and the US Treasury yields are declining in response to the US retail trade report

The main news at the end of last week was the data from the US retail sector. Sales dropped sharply despite the holiday shopping period. The pandemic has forced stores to close and discourage consumers from spending more. Total retail sales fell by 0.7% in December. The benchmark also came out negative at the level of -1.4% versus -0.1% that was expected by economists. The control group goods showed a 1.9% drop in sales, pushing preliminary estimates of economic growth in the fourth quarter down.

It’s expected that the additional financial support of households will help to bolster Americans' financial situation, the next few months could be challenging for the retail industry until tourism and recreation activities resume. On Thursday, President-elect Joe Biden released details of yet another support package that offers additional government stimulus payments of $1,400 instead of the expected $2,000. That put additional pressure on the stock markets.

The Chinese economy performed well this morning, confirming its leadership in the recovery of global economic growth. The annual growth rates were higher than expected at the level of 6.5%. The annual rate of industrial production in the Middle Kingdom accelerated to 7.3%. But European stock exchanges are ignoring the indicators so far, as well as the oil market, which has been declining since last Friday.

Meanwhile, Goldman Sachs economists raised their forecasts for the US growth for this year and the subsequent period, citing President-elect Joe Biden's spending plans, but the stock and credit markets didn’t react. Investors took a break before central bank meetings this week, partially cutting long positions in risky assets. Stock indices declined and Treasury yields fell below 1.10%.

Main market quotes:

S&P 500 (F) 3,752.12 -10.13 (-0.27%)

Dow Jones 30,814.26 -177.26 (-0.57%)

DAX 13,766.10 -21.63 (-0.16%)

FTSE 100 6,722.17 -13.54 (-0.20%)

USD Index 90.903 +0.149 (+0.16%)

by JustMarkets, 2021.01.18

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.