United States consumer prices unchanged; retail sales fall again

Cautious Fed Lifts Global Stocks to Record High, Investors Eye Earnings Lift

Consumer Inflation, Retail Sales Soft In June, Industry Solid

USA equities notched new record highs on Friday - but perhaps not for the reasons many investors think.

Wall Street expected a 0.1% gain in overall retail sales and a 0.2% rise ex-autos.

"Caution on the part of consumers comes despite a solid job market and booming equity markets and is feeding into core inflation through price wars on cell phone service, airfares, cars, clothing", she told Business Insider.

This fell short of market expectations of a 0.1% increase.

The 10-year yield settled at 2.319%, compared with 2.348% Thursday and 2.393% a week earlier.

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The dollar was little changed against a group of peers early on Friday, as currency investors remained cautious ahead of US inflation data due later in the session, which is expected to set the greenback┬┤s near-term direction. The Standard & Poor's 500 index gained 0.2 percent to 2,447.83.

Meanwhile, the Commerce Department reported that retail sales slipped 0.2% in June, while sales excluding autos also declined 0.2% from May.

If we look at the chart of Core inflation below it shows just how bad the inflation problem is - the chart shows core inflation in an entrenched downtrend, measured on a year-on-year basis over a five-year period.

The U.S. data bolstered expectations that the U.S. Federal Reserve would likely to move slowly to continue raising interest rates in the absence of inflation signs. That followed a report that the European Central Bank is likely to signal in September that its asset purchase programme will be gradually wound down next year. Waiting too long to remove accommodation could eventually require the Fed to raise rates too rapidly and risk pushing the economy into recession. Meanwhile, growth and inflation has started to show with more consistency in Europe and the United Kingdom, and this has led to even more deductive weakness in the Greenback as traders shift rate hike bets in the Euro and British Pound. The Dow rose 0.1 percent to 21,553.09. Retail sales rose 2.8 per cent year-on-year in June.

USA 10-year yield fell to 2.303 percent, from 2.348 percent late on Thursday. The 10-year German Bund ticked up nearly one basis point to yield 0.525 per cent.

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Janet Yellen's hawkish sentiment earlier this month gave way to a cautious tone on Wednesday when she conceded that subdued inflation could hinder the Fed's rate hiking plan - presumably she had been privy to Friday's inflation figures before the rest of us.

Spot gold gained 0.96 pct at $1,228.61 per ounce by 3:01 p.m. EDT (1901 GMT) after hitting $1,232.76. Oil prices rose 1 per cent.

US crude futures traded at $45.81 per barrel, up 1.7 per cent so far on Tuesday, extending their recovery from Monday's near two-week low of $43.65.

The most-active US gold futures for August delivery futures settled up $10.20, or 0.84 percent, at $1,227.50 per ounce.

In oil markets, benchmark Brent and United States WTI futures contracts were on track for weekly gains.

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