Uff!!! There is a raft of disagreeable looking data coming through today:
US retail sales slid and import prices dropped at the sharpest rate on record last month, fuelling more talk of deflation and offering further evidence of the continued weakness of the US economy. Treasury bond yields sank to 40-year lows, stock prices eased and the dollar weakened slightly in reaction to the data. Futures markets priced in stronger odds of more Federal Reserve interest rate cuts. The fall in sales was accompanied by consumer confidence data suggesting that 73 per cent of Americans consider the economy's condition to be "negative," and the results of a poll in which most respondents said they lacked confidence in President George W. Bush's handling of the economy. Some economists said the data showed that the rebound many had hoped for after the Iraq war had failed to materialise.The Commerce Department said sales dipped 0.1 per cent in April, against economists' predictions of a 0.4 per cent gain. Excluding car sales, sales fell 0.9 per cent.The figures continued an erratic pattern - sales dropped 1.4 per cent in February, but jumped 2.3 per cent in March. Separately, the Labor Department reported a 2.7 per cent plunge in import prices - the biggest fall in a decade. The drop in both sales and import prices reflected, in part, a steep slide in prices for oil and gasoline, but in both cases, the declines were broad-based and much bigger than economists had expected. "This report will be disappointing to [Federal Reserve Chairman] Alan Greenspan, who has led the chorus for a likely pickup," said Peter Kretzmer, an economist at Bank of America Securities.
Source: Financial Times