A drop in U.S. Retail Sales in July helped boost demand for U.S. debt instruments on Thursday. This report showed that spending is still weak as consumers worry about their homes and their jobs. The numbers indicate that the cash for clunkers program may have had something to do with the drop in retail sales. Consumers may have used money earmarked for other items for a new automobile.
Yields fell to their lowest levels in a week driving up September Treasury Notes and Treasury Bond futures. The drop in retail sales indicated to investors that inflation is being contained making Treasury instruments an attractive investment.
Early this morning news out of the Euro Zone sent the September Euro higher. Euro Zone GDP was better than expected buoyed by surprise increases from Germany and France. This news spilled over to the other currencies as appetite for risk returned to the market. The U.S. Dollar was weak versus all major currencies today.