GLOBAL MARKETS: Shoppers play ball
US retail sales increased in May and sales for April were revised higher, suggesting a pick-up in consumer spending
US retail sales increased in May and sales for April were revised higher, suggesting a pick-up in consumer spending that could ease fears the economy was slowing down sharply in the second quarter. The fairly upbeat report follows a raft of weak data, including a step-down in hiring in May and tame inflation readings, that has led economists to believe the Federal Reserve will cut rates.
A key metric for the European Central Bank (ECB) of where investors expect inflation to be in future — so-called five-year inflation swaps — has fallen to just under 1.2%, the lowest level since records began in 2003. Analysts say the latest drop could force the hand of the ECB to launch more monetary stimulus, a course of action the central bank is already considering.
Last week, ECB president Mario Draghi said he was watching inflation expectations closely. "We are taking this seriously," he said.