Following policy changes in Taiwan, India, Malaysia and South Korea, Thailand raised rates by 25 bps to 1.5%. It was expected but this comes just a few months after daily rioting that threatened to derail their economy. A BoT official said “the economy has strengthened, so it’s time to start adjusting the rate to normal levels.” To the same theme, EXPD, a global logistics co, raised guidance. The pound rose to a 2 mo high vs the $ after a slightly better than expected jobs figure. Portugal successfully sold 2 yr and 9 yr notes. EU 3 mo LIBOR fell for the 1st time in a month but 3 mo Euribor ticked higher again. ABC confidence fell 2 pts to a 4 week low. The MBA said their purchase component fell to the lowest since Dec ’96 as low interest rates cannot offset the drop off in demand in a post tax credit world. Refi’s fell 2.9% but after sharp gains in the previous weeks. II: Bulls 32.6 v 37 Bears unch at 34.8, the 1st time Bears are above Bulls since April ’09.
June Retail Sales fell more than expected by .5% but the ex auto decline was in line down .1% and taking out both auto and gas station sales saw a gain of .1% vs the forecast of flat. The real core figure which excludes auto’s, gasoline and building materials saw a rise of .2% after two prior months of declines. Thus, net-net, the headline # masks an underlying bounce which was led by electronics, health/personal care, clothing, department stores, restaurant and bars and online retailers. The sales data gets plugged into GDP and won’t do much to alter the expectations for a 3.2% rise in Q2 with some slowing in the 2nd half. A sustainable rise in sales needs income growth and job creation and that are the two most important economic data points to watch in terms of consumer spending’s contribution to growth.