Bonds & Stocks
The world’s biggest bond market climbed as slowdown in retail sales bolstered the case for the Federal Reserve to cut interest rates in the second quarter. Treasuries rose across the US curve, with two-year yields dropping four basis points to 4.54%. Fed swaps fully priced in a rate reduction in June. The dollar retreated. The S&P 500 was little changed a day after the US benchmark gauge reclaimed its historic 5,000 mark. US retail sales broadly declined in January, indicating consumers took a breather after a strong holiday shopping season.
Economy
US retail sales broadly declined in January, indicating consumers took a breather after a strong holiday shopping season. The value of retail purchases, unadjusted for inflation, decreased 0.8% from December after a downward revision to the prior month, Commerce Department data showed Thursday. The drop was the biggest in nearly a year. Nine of 13 categories posted decreases, led by building materials stores and auto dealers.
World
Japan’s economy unexpectedly slipped into recession after shrinking for a second quarter due to anemic domestic demand, prompting some central bank watchers to push back bets on when the nation’s negative interest rate policy will end. Gross domestic product contracted at an annualized pace of 0.4% in the final three months of last year, following a revised 3.3% retreat in the previous quarter, the Cabinet Office reported Thursday. The report showed both households and businesses cut spending for a third straight quarter as Japan’s economy slipped to fourth-largest in the world in dollar terms last year. Germany now has the world’s third-largest economy.