Market Pivots from Inflation to Growth: Economic Indicators and the USD/JPY Currency Pair

US economic data prompts Treasury yields to rise, USD/JPY also increases

In recent days, there has been a noticeable shift in the market’s focus from inflation to growth. Yesterday was a turning point, with softer CPI and declining retail sales indicating that this change is taking place at a slow pace. Today’s economic reports were mixed, with initial jobless claims slightly higher than expected but still at historically low levels. Housing starts and the Philly Fed missed estimates, while import/export prices were higher than anticipated. Despite these developments, Fed rate cut pricing decreased slightly and Treasury yields rose, with US 2-year yields up 3.0 basis points on the day.

The USD/JPY currency pair has followed the movement in yields, increasing by 31 pips to reach a session high of 155.21. While some analysts attribute these movements directly to economic data, others believe they may be due to position squaring and a much-needed market breather. S&P 500 futures are currently flat as the market continues to adjust to changing economic indicators and data points. Overall, it appears that the shift towards growth is taking place gradually, with investors remaining cautious about making significant decisions based on short-term fluctuations in the economy or financial markets.

Leave a Reply