The week promised to be a hot one with the accumulation of US inflation data. After an initial warm-up round and a minor scare over the Producer Price Index (PPI), which came in well above expectations, investors were reassured by the release of the Consumer Price Index (CPI). The core CPI was in line with expectations at 3.4% annualized, down 0.1 points on the previous month. Admittedly, this is still a long way from the 2% target, but it could have been much worse.

Trimmed inflation

At the same time, the deceleration in retail sales was well received. It confirms the effects of the restrictive policy pursued by the Federal Reserve for the past two years, and is fueling the prospect of a rate cut to avert recession and revive growth. So all is for the best in the best of all possible worlds.

Retail sales

The yield on the US 10-year bond has clearly stalled, propelling the S&P 500 to new all-time highs. However, we mustn't bury it just yet, as it is currently testing the key 4.33% level, which only a break of would allow the current easing towards 4.00% to continue.