Japanese data was dismal on Tuesday, as consumers continue to keep a tight grip on the purse strings. Household Spending declined by 3.0%, the third straight drop. The figure did beat the estimate of -3.7%. Retail Sales, the primary gauge of consumer spending, posted a decline of -0.6%, worse than the estimate of -0.4%. This was also a third straight decline. As well, Unemployment Rate rose to 3.7%, above the estimate of 3.5% and the highest level recorded since January. These figures point to trouble, as less consumer spending will likely translate into decreased economic growth and put more pressure on the Japanese currency.
The S&P/Case-Shiller price report shows a sharp slowdown in US home prices in May, which Mizuho Securities USA chief economist Steven Ricchiuto says reflects the US housing market losing momentum. "This downshift in prices reflects the fact that the housing market has lost its upside momentum despite the low level of yields," he says. "This is something none of the growth bulls were expecting to develop this year." The choppy recovery in the housing market is a part of the economy the Fed is still keeping a close eye on, and could build a case for the doves to hold rates low for longer.