Good CPI and Housing Data Fires Risk Appetite

Economic Data

- (PL) Portugal July PPI M/M: 0.3% v 0.0% prior; Y/Y: -0.8% v -0.4% prior
- (BR) Brazil Aug IGP-M Inflation (2nd Preview): -0.4% v -0.3%e
- (US) ICSC Chain Store Sales w/e Aug 15th: w/w -1.3%; y/y: +3.8%
- (RU) Russia July Real Retail Sales M/M: 2.9% v 2.5%e; Y/Y: 1.1% v 0.9%e
- (RU) Russia July Unemployment Rate: 4.9% v 5.0%e
- (PL) Poland July Average Gross Wages M/M: 0.6% v 0.9%e; Y/Y: 3.5% v 3.8%e
- (PL) Poland July Employment M/M: 0.1% v 0.1%e; Y/Y: 0.8% v 0.8%e
- (US) July CPI M/M: 0.1% v 0.1%e; Y/Y: 2.0% v 2.0%e
- (US) July CPI Ex Food and Energy M/M: 0.1% v 0.2%e; Y/Y: 1.9% v 1.9%e
- (US) July CPI Index NSA: 238.250 v 238.316e; CPI Core Index SA: 238.311 v 238.520e
- (US) July Housing Starts: 1.093M v 965Ke; Building Permits: 1.052M v 1.0Me
- (US) Redbook Retail Sales w/e Aug 15th: +3.7% y/y, Aug MTD: +0.5% m/m; Aug MTD:+4.2% y/y
- (EU) Weekly ECB Forex Reserves: €213.1B v €213.3B prior

- Tame US inflation, good housing data and some excellent retail quarterly reports are all contributing to the very positive sentiment this morning. As of writing, the DJIA is up 0.42%, the S&P500 is up 0.38% and the Nasdaq is up 0.20%.

- The July CPI inflation report met expectations, while the core reading was ever so slightly softer than expected. The m/m and annualized rate of inflation growth has moderated from June and May levels, which will likely give the Fed doves ammunition for their calls to hold off on tightening for longer.

- Homebuilders are up again this morning thanks to the slightly better-than-expected July housing starts numbers. Starts rose 8%, halting two straight months of declines. Some skeptics point out that multi-family units were the lion's share of the gain, but single-family starts also saw solid improvement.

- EUR/USD moved out to fresh 2014 lows below 1.3330 this morning as sell stops were elected. There were reports of option barriers layered all over the 1.3300 handle. Dealers are eyeing a break of 1.3294, which was the November 2013 low. Note that the 10-year yield tested back toward yesterday's lows in the premarket this morning, dropping a low as 2.36% before shooting back above 2.40% after the open of cash equity trading.

- Sprint's new CEO fired the opening shot in a price war for US mobile customers this morning. Sprint has launched a new family plan allowing up to 10 lines to share 20GB worth of data for $100 per month (although the plan is only good through 2015). The company is also offering to reimburse up to $350 of the costs of ending a contract with another carrier. AT&T has been advertising up to four lines for $160 per month, while T-Mobile has been offering four lines for $100 per month, though that price is being offered for less than two years. Shares of Sprint are down 4.5%, VZ and T are down slightly, while TMUS is up 1%.

- Shares of Home Depot are up 4.5% after the company reported strong second-quarter results and hiked its FY14 guidance. Sales comps saw excellent gains and the average ticket rose. On the conference call, executives said the housing market remains a modest tailwind, and noted an acceleration of big-ticket spending in the quarter. Shares of LOW are up 2%. TJX is up 7% on strong results, good comps and raised FY guidance. 

Looking Ahead

- 11:30 (US) Treasury to sell 4-Week and 52-Week Bills
- 13:00 (US) Fed Fisher luncheon address
- 15:00 (AR) Argentina Q2 Unemployment Rate: 7.8%e v 7.1% prior
- 16:30 (US) Weekly API Oil Inventories
- 17:00 (CO) Colombia Jun Trade Balance: -$209.5Me v +$347.4M prior; Total Imports: $5.2B v $5.4B prior
- 19:30 (AU) RBA Gov Stevens semi-annual testimony before House Economic Committee
- 19:50 (JP) Japan July Trade Balance: -¥713.9B v -¥822.2B prior; Adj Trade Balance: -¥761.3Be v -¥1.0808T prior
- (AK) Alaska, Wyoming Hold Primary Elections