Treasury yields are rising after a couple of strong economic releases about consumer spending and increased manufacturing output. It seems the US economy isn't ready to head into a recession just yet. In addition to the good news about the US economy, the greenback is also firmer after both a cool Canadian inflation report put BOC rate hike expectations on ice and as falling UK pay growth will allow the BOE to hold off on raising rates.
A strong retail sales number like this has traders wondering if it is possible for this momentum to persist into Q4 and if this will end up being inflationary? After a round of banking earnings and spending data, the US consumer is still looking healthy. Despite strong sales and production releases, the Fed won’t be raising rates at the November 1stmeeting. At this point it seems they will need to keep suggesting that they might not be done tightening.