The yield on the US 10-year Treasury note edged down to 4.45% on Thursday, retreating from its highest level since July reached in the previous session, as investors continued to assess the political backdrop and its implications for the economy and monetary policy. Oil prices stabilised, and market attention also turned to the summit between US President Trump and Chinese President Xi.
On the data front, US retail sales slowed in line with expectations but continued to signal resilient consumer demand. Headline retail sales rose 0.5% in April, while core retail sales, which feed directly into GDP calculations, also increased by 0.5%. Earlier in the week, both CPI and PPI reports pointed to renewed inflationary pressures linked to the energy shock triggered by the outbreak of war in Iran.
Investors currently expect the Federal Reserve to leave the federal funds rate unchanged for the rest of the year, though markets are still pricing in roughly a 28% chance of a 25 bps rate hike in December.
