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A Joe Biden-Xi Jinping summit — in which the Chinese leader called the U.S. president his “old friend” — has put markets in a good mood.
Whether that lasts however, could depend on U.S. October retail sales figures due out later this session.
Given that personal consumption comprises almost 70% of U.S. GDP, it matters hugely whether Americans choose to spend or save. Plus, U.S. shoppers are also a key driver of the pressures besetting global supply chains.
And while the forecast is for a 1.1% rise, the risk is that inflation — at the highest since 1990 — will have started to dent spending. Remember, data last Friday showed consumer sentiment at a decade-low.
A clutch of Q3 earnings from retailers such as Walmart (NYSE:WMT) and Home Depot (NYSE:HD) will add to the picture. So far, equity investors don’t seem perturbed, having lifted Wall Street’s retail shares index more than 10% in the past month, allowing it to outperform the broader S&P 500.
Britain meanwhile has released robust jobs figures showing the end of furlough schemes had not lifted unemployment. With a Bank of England interest rate rise now all but certain for December, sterling is inching higher .
A buoyant Asian session following the Biden-Xi summit leaves European and U.S. equities tipped to open firmer. The Chinese yuan has risen to a five-month high against the dollar.
And bond yields have inched lower, though at 1.6%, 10-year Treasury yields are still up almost 20 basis points since before last Wednesday’s inflation data.
Finally, watch shares in EV maker Tesla (NASDAQ:TSLA)>. They have lost more than $200 billion in market cap as its CEO Elon Musk continued to offload holdings.
Key developments that should provide more direction to markets on Tuesday:
-Reserve Bank of Australia Governor Philip Lowe dismissed market pricing for a 2022 rate hike
-Vodafone raises free cash flow guidance after good H1; Higher cigarette prices lift Imperial Brands (OTC:IMBBY) revenue
-Bitcoin fell towards $60,000, now down more than 11% since Nov. 10 record high
-U.S. retail sales October/industrial production/inventories
-U.S. TIC data – foreign buying of bonds Sept
-Fed speakers: Bank of Atlanta President Raphael Bostic
-Emerging markets: Hungary central bank to raise interest rates
-Europe earnings; Vodafone, Imperial Brands, Buoyges, Zooplus,
-U.S. earnings: Home Depot, Walmart, La-Z-Boy. Retail sales, https://fingfx.thomsonreuters.com/gfx/mkt/byvrjkelmve/Pasted%20image%201637012593807.png
