Daniel Shainberg
"Retail drives the economy" is a common phrase one might hear on a trading room floor. Retail stocks are notoriously cyclical but are often used as great predictive tools as the U.S. economy is driven by this important sector.
The retail sales number for August show that the U.S. consumer slowed spending with retail sales dropping well below the expected 0.5% to 0.1%. The miss was blamed on a decline in auto sales.
Core retail sales excluding autos rose slightly but still missed expectations. With these unexpected declines, it is highly likely that Q3 GDP forecasts are going to be trimmed. And with lower GDP, the likelihood for "lower rates for longer" increases. Nevertheless, the 10-year surprisingly rose to hit the psychological 3% yield mark today before retreating slightly. This is an opposite move to what the retail sales figures would otherwise imply and suggests that the miss is being viewed as a minimal "blip."
The market clearly expects more growth, more expansion, more inflation.
10 Year Treasury Yield
The retail sales number for August show that the U.S. consumer slowed spending with retail sales dropping well below the expected 0.5% to 0.1%. The miss was blamed on a decline in auto sales.
Core retail sales excluding autos rose slightly but still missed expectations. With these unexpected declines, it is highly likely that Q3 GDP forecasts are going to be trimmed. And with lower GDP, the likelihood for "lower rates for longer" increases. Nevertheless, the 10-year surprisingly rose to hit the psychological 3% yield mark today before retreating slightly. This is an opposite move to what the retail sales figures would otherwise imply and suggests that the miss is being viewed as a minimal "blip."
The market clearly expects more growth, more expansion, more inflation.
10 Year Treasury Yield
Dan Shainberg
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#RecessionResister
@DanShainberg
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