Markets have priced in two rate cuts this year, mainly due to America’s trade war with China. But the US economy will next month celebrate 10 years of expansion, the longest in history. Picture: BLOOMBERG/ANDREW HARRER
Markets have priced in two rate cuts this year, mainly due to America’s trade war with China. But the US economy will next month celebrate 10 years of expansion, the longest in history. Picture: BLOOMBERG/ANDREW HARRER

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.

Reuters

Gimme stimulus

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.

Financial Times