Expectations of economic recovery continue to rise, boosted Thursday by mostly solid retail sales data and an easing in the number of jobless filing new claims. Retail sales ended two months of decline with a solid gain in May, though improvement was centered at gas stations in a reflection of rising pump prices. Outside of gas stations, most retail sectors did post gains but making for only a very small net gain. Though the best news in jobless claims data centered on new claims, which fell 24,000 to 601,000, the recent pace of increase in continuing claims has been slowing. Stocks were boosted by the data with the S&P 500 rising slightly to just under 945.
A big issue for the markets right now is oil, which is the focus of a commodity sector where prices are rising not only on expectations of improving demand but on hedging should dollar inflation begin to appear. At $72.50 for oil, many argue weak demand and heavy supply point to a price half of that. Talk is heavy in the commodity sector whether the dollar is under attack by the federal government and its policies of stimulus spending and quantitative easing. Aluminum is the new center of concern, up 15 percent in the last week on talk of heavy short covering and an absence of sellers. The dollar fell 1.2 percent on the dollar index to end the day at 79.42.
All the concern didn't upset the week's Treasury auctions where the day's 30-year auction was very well received. Demand for Treasuries improved in flattening trade with the 30-year bond down 7 basis points to 4.69 percent. Gold tested $960 before settling back at $955 while silver ended at $15.39.