USD Relief After Retail Sales Continue to Show Upbeat Consumer Sentiment in the US

While the Federal Reserve and other central banks have been raising interest rates at a immense pace in the last two years, the US consumer has been showing resilience, keeping up spending, best portrayed by the continuous beat in the US retail since May. many have been associating the higher spending with savings from the pandemic lockdowns when people didn’t spend too much. Although that doesn’t seem to be the case, since we’re 2 years after the restrictions.

Retail sales in the United States fell by 0.1% on a monthly basis in October, compared to a 0.9% growth in September, according to official statistics released by the US Census Bureau on Wednesday. The data exceeded the market’s forecast of -0.3%.

US core retail sales which exclude Autos increased by 0.1% instead in the reporting period, compared to an expectation of falling flat qt 0% and a 0.7% growth in September wich was revised higher to 0.9% yesterday, while the Control Group increased by 0.2%. In a reaction to the US Retail Sales figures, the US Dollar popped higher versus major currencies.

Restaurant and supermarket expenditure increased by 0.3% and 0.7% last month. Following a summer of impressive economic activity, Fed Chair Jerome Powell and other central bank officials have stated that the economy will need to cool more in order to keep inflation on pace to the 2% objective. But, yesterday’s retail sales showed that the US consumer is holding well, and spending will keep the US economy afloat.

US October 2023 Retail Sales Report 

• October retail sales -0.1% vs -0.3% expected
• Prior was +0.7% (revised to +0.9%)

Details:

• Core sales ex-autos +0.1% versus 0.0% expected.
• Prior core sales ex-autos were +0.6%
• Control group +0.2% versus 0.2% expected.
• Prior control group +0.6% (revised to +0.7%)
• Retail sales ex gas and autos +0.1% vs +0.6% prior

Sales were increasing for the fifth month in a row when this report was written. The modest drop this week is hardly cause for celebration, especially as the control group was in line with expectations. Following this data and a strong Empire Fed, there has been some US dollar purchasing. Treasury rates are also rising, with US 10-year notes approaching 4.50%.