It took a while but now the pattern is becoming very clear: the weak Q1 in the US was a one-off and the economy is recovering from the harsh winter and port strikes. Upward revisions to retail sales data for March and April suggest it happened in March. The puzzle around the failure of the US to rebound has thus been solved, through revisions to the data which now paints a picture in line with what one should expect based on the timing of the cold weather. So, after a lot of head-scratching for a while, things look more clear now - said Danske Bank Markets
The rebound story is not only supported by the retail sales this week but also a decline in claims data and stronger housing activity seen in recent months. On top of this, exports are rebounding strongly following the decline related to the port strikes, so growth is getting a kick from many sectors now. The main drag is still coming from energy investments but these are a small part of the economy and not a serious concern.
The stronger data in the US is adding fuel to the reflation theme, which has pushed bond yields higher and is likely to add further upward pressure in coming quarters, especially in the US.
