Sticky US Consumption Data, Soft UK CPI Ahead, Japan Holds

Global markets reacted to a mix of economic signals on Tuesday, led by a surprise drop in U.S. retail sales and cautious remarks from Fed officials. While equities slipped and bond yields fell, currency markets saw renewed volatility. This global market daily wrap highlights key developments across the U.S., Europe, Asia, and emerging markets.

Global Market Daily Wrap: U.S. Retail Sales Surprise

• Retail Sales in May unexpectedly declined by -0.1% (vs +0.3% expected), while Core Retail Sales rose by +0.1%, slightly below forecasts, signaling a mixed consumption picture.
• Market reaction: S&P 500 fell -0.3%, while Nasdaq slid -0.6% as consumer-sensitive stocks underperformed.
• 10-year Treasury yields dropped 4 bps to 4.21% as rate cut expectations moved forward slightly.
• Dollar Index (DXY) retreated to 104.9, marking a 2-day decline.
• Fed’s Goolsbee reaffirmed a cautious stance, saying inflation has made “modest” progress but needs more convincing signs.

Eurozone Steady as Financials Lead Gains:

• No major macro data released.
• EURO STOXX 50 gained +0.2%, led by financials and industrials.
• Bund yields were stable around 2.41%.

UK Awaits Key Inflation Data:

• Markets remained cautious ahead of Wednesday’s May CPI release, expected to fall to 3.3% YoY from 3.6%.
• FTSE 100 was flat; GBP/USD dipped slightly to 1.2690 amid pre-CPI positioning.

Japan Market Moves: BoJ Stays Put, Yen Rallies

• BoJ kept rates unchanged at 0.5%, with no shift in bond-buying operations.
• Governor Ueda signaled discussions on tapering could begin “in the coming months,” sending USD/JPY sharply lower to 157.5.
• Nikkei 225 fell -1.0% as exporters were hit by the yen’s rebound.
• 10Y JGB yields declined 3 bps to 0.97%.

China Sentiment Mixed Amid Housing Weakness:

• Sentiment was mixed as property sector concerns reemerged following weak housing sales data in tier-2 cities.
• Shanghai Composite ended flat; CNH slightly weaker vs USD at 7.28.

EMEA Highlights in Today’s Global Market Daily Wrap:

• South African rand firmed after SARB hinted at keeping rates restrictive despite inflation moderating.
• Turkish lira was steady near 32.60, awaiting this week’s CBRT rate decision.
• Saudi Arabia’s Tadawul index climbed 0.5% amid rising oil prices.