Retail Sales

✅July retail sales +1.0% versus +0.3% expected
✅Prior month: 0.0%
✅Prior month revised down: -0.2%
✅Retail sales came in at $709.7 billion vs $704.3 billion in the month before

Highlights:

✅Retail sales: +1.0 vs 0.0% prior
✅Retail sales YoY: +2.7 vs +2.3% prior
✅Ex Autos: +0.4 vs 0.4% prior (est.+0.1%)
✅Prior ex autos revised up : +0.5%
✅Control group: +0.3 vs 0.9% prior (est. 0.1%)
✅Prior month control group: 0.9%
✅Ex autos and gas: +0.4vs 0.8% prior
✅These are good numbers.

🤷‍♂️With positive data coming from both PPI, CPI and now Retail Sales figures, this should be positive for the the overall market at least for the very near term.

🤷‍♂️One thing to keep in mind is what we heard on earnings call from Amazon, Home Depot, McDonalds, etc. on slowing consumer demand. This data may be skewed due to the start of the Summer.

🤷‍♂️The combined recent data along with fed comments in my opinion raises the stakes for no rate hikes in September, depending on how August looks. The Fed typically tires to be apolitical. If August the data is even remotely suggestive of strength in the economy with lowering inflation and job market stability The Fed may skip the September rate cut.

CPI

✅July CPI +2.9% vs +3.0% y/y expected
✅Prior was +3.0% y/y
✅m/m reading at +0.2% vs +0.2% expected
✅Month-over-month unrounded +0.1549%

Core measures:

✅Core CPI +3.2 vs +3.2% expected
✅Core CPI m/m +0.2% vs +0.2% expected
✅Core unrounded +0.166%
✅Real weekly earnings -0.2% vs +0.3% prior
✅Super-core m/m +0.205% vs +0.054% prior
✅Super-core y/y +4.468% vs +4.651% prior

Highlights:

✅Shelter rose 0.4% m/m, accounting for ~90% of the monthly increase vs +0.2% prior
✅Rent +0.5% vs +0.3% prior
✅Owners’ equivalent rent +0.4% vs +0.3% prior
✅Lodging away from home +0.2% vs -2.0% prior
✅Food index up 0.2%
✅Used vehicles -2.3%
✅Airline fares down 1.6% vs -5.0% prior
✅Motor vehicle insurance +1.2% vs +0.9% m/m prior

Target rate probabilities

✅Rate cuts by year-end Fed: 103 bps (62% probability of 25 bps rate cut at the upcoming meeting) vs 106 bps prior to the data.

🤷‍♂️That’s a slight change in market expectations and suggests that markets were expecting a lower CPI print. That said, the unrounded numbers show better than the headlines.

🤷‍♂️There was some front-running of this report after PPI yesterday so I’m not surprised to see some US dollar strength and bond weakness on the headlines but so far its been insignificant.

🤷‍♂️These numbers appear to be better than expected.