With expectations now through the roof for QE coming in September (and hinted at in Jackson Hole at the end of the month) it is interesting to see how U.S. economic data has moderated/improved a bit in August. The raw employment growth at the beginning of the month was decent although the rate went up to 8.3%. Today's retail sales at 0.8% (core at 0.9%) was well in excess of 0.3% expected. And producer prices came in a tad hot at 0.3% versus 0.2% expected.
- In July, sales of motor vehicles and parts rose 0.8%. Receipts at electronics and appliance stores increased 0.9%. Sales of building materials gained 1.0%, while receipts as gasoline stations advanced 0.5%.
Now the question is, has the market backed the Fed in a corner with these sky high expectations. Meaning the Fed's hand is already forced and they must deliver no matter what the economic data. Should be interesting to see how it works out, especially since European and Chinese data continue to disappoint and the market seems completely transfixed on central bank assistance.
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