SCOREBOARD: US data delight

US retail sales were strong again, exceeding expectations for a 0.8 per cent rise to be up 1.1 per cent in September, after a similarly strong 1 per cent gain the month prior. Sales ex autos and gas were up 0.9 per cent compared to expectations for a 0.4 per cent rise. All the indicators are consistent then – a spike in consumer confidence, a surge in consumer credit, jobs growth is strong (equal to pre-GFC boom average) and spending is strong. Anyone disappointed with this recovery has unrealistic expectations and has, perhaps, been reading too many fairy tales. Similarly, the RBA board needs to calm down and stop panicking – Aussie car sales out yesterday hit a new record!

US stocks got a clear boost from this data and a positive lead out of Europe (Dax up 0.4 per cent, the CaC up 0.9 per cent and the FTSE up 0.2 per cent) which itself wasn't based on any good local news but probably the absence of anything bad. In any case a tentative bid was on early in the US, firming during the session so that into the close, the S&P500 is up 0.7 per cent (1439), the Dow is up 0.7 per cent (13418), while the Nasdaq is 0.3 per cent (3054) higher. It wasn't just the retail sales that helped give stocks a bid. All the data out last night was solid and there was an upbeat earnings report from Citi to boot. But to the data - US business sales rose 0.5 per cent in August with inventories up 0.6 per cent. There has been a consistent pattern here – sales are solid and firms are restocking in anticipation of further strong sales. That's a solid recovery just there. Finally for the data flow, the Empire State manufacturing survey rose from -10 to -6 – still negative but these surveys are volatile and the more important ISM index has turned.

Commodities failed to share in this turn in sentiment, although moves were small. So copper was flat, crude was off about 0.2 per cent ($91.7) while gold is down $21 to $1738, presumably on fears the printing presses will be turned off – fear not.

Similarly price action elsewhere was comparatively mute – last night was all about equities. On the forex front, the Australian dollar is up about 30 pips (from 1630) to 1.0250 while euro is at 1.2947 or 40 pips higher. The British pound and yen sit at 1.6072 and 78.68 respectively. Similarly rates did little, with the 10-year Treasury trading within a 3bp range – currently at 1.669 per cent (1bp higher from 1630). The 5-year is at 0.66 per cent while the 2-year sits at 0.26 per cent. Aussie futures then did little, 3s at 97.65 and 10s traded at 97.075.

In other news, an ECB member, Josef Bonnici, suggested Spain should ask for a bailout now and not wait until another bout of market panic – for what it's worth Spain's 10-year was up 19bps last night to 5.79 per cent. Spain's retort is that they have already competed 90 per cent of their fund raising this year and can easily meet their debt repayments.

Turning to the day ahead, the calendar shows the RBA minutes are out at 1130 AEDT. The global and domestic data flow makes any discussion or justification for a cut pure PR work. So the minutes won't have any value as an economic or policy document. Despite the improved economic data, especially globally, the best bet – as it was prior to the October rate cut – is to just expect more rate cuts. Increasingly I think the RBA is being run the same way as the Fed – strong data described as weak and a reliance on constantly incorrect pessimistic forecasts. It looks as though decisions have been predetermined in the mind of Board members – everything else is just PR.

Tonight we get UK inflation, recall the BoE has dropped its inflation target, which is soon followed by eurozone inflation. Also tonight, we get the German ZEW survey and European trade figures. For the US, the key releases are consumer prices, industrial production and the NAHB housing market index.

That's about the lot, have a great day…