Archived IMT (2008.10.15)

The 1.2% decline in US September retail sales (expected -0.7%) reflects deterioration in demand for clothes, food and durables drives back attention towards poor economic fundamentals, prompting renewed declines in US equity indices and a pull back in yen crosses. US Empire state manufacturing index drops to -24.6 in October from -7.4, the worst level on record. New orders tumble to -21 from 4.4. The sales report carries negative implications for September retail jobs, whch have now been in the red longer than in the last recession. USDJPY tests below 101 yen, eyeing 100 later in the session, while GBPJPY, having already fallen below our projected support of 176 to test as low as 175. Bernanke's speech at noon on the economic outlook to further indicate macroeconomic weakness and open the door for rates to drop as low as 1.00% before year-end.