The October US retail sales report beat expectations, monthly growth in nominal terms amounted to 1.3% against 1% forecast. Excluding volatile components (fuel, cars), growth amounted to 0.9% against 0.2% forecast. The dollar rallied on the news, but trimmed down gains later, as markets apparently priced in a recovery in risk appetite on a favorable combination of lower consumer inflation and the expansion of the US economy (the so-called “goldilocks” scenario):

US stocks trade slightly lower, consolidating around key resistance levels (4000 for SPX). The breakout of the level on Tuesday wasn’t sustainable however, strong support at 3950 indicates a high probability of a retest in the near-term:

Mortgage applications rose 2.7% in the week ending November 11, data showed today, while the mortgage rate fell from 7.14% to 6.9%, thus supporting demand. This is another argument supporting the cases that the US economy continues to expand at a healthy rate. Investors are waiting for the release of the NAHB real estate market index to gauge inflation pressures in the market.

Industrial production in the US fell by 0.1% on a monthly basis, falling short of growth forecasts of 0.2%. Growth in the manufacturing industry amounted to 0.1%, below the forecast of 0.2%.

At the same time, inflation in the UK continued to grow in October and exceeded 11%. The market expected 10.7%. However, with the risks of a global recession affecting the British economy having abated somewhat in the last week, market participants may be inclined to assume an acceleration in the pace of tightening by the Bank of England, which will be an argument in favor of a strong pound.