Retail Sales and Chinese inflation data

We have had some good data points in the last 24hrs which is giving us a good oversold bounce. When you strip out the gasoline sales, US retail sales grew 0.3% month over month. Nothing great but considering the weak economic data we have been seeing, it could have been worse.  The other big data point was that Chinese inflation came in line with expectations at 5.5%. There were fears it might come in as high as 6%. This raises hopes that we maybe getting closer to the point when the Chinese start ending measures to bring down inflation.

The big question now is whether this is a sustainable up move or just a small bounce before the downtrend resumes. At this stage, I honestly cannot make a call based on the current information. I do think this bounce is based on real data not just purely based on technical factors. The fact that treasury yields are rising confirms that market participants are getting comfortable in taking more risk. I will update my views as we get more information.

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