Tuesday, September 17th, 2024
Pre-markets are up a day prior to the Fed’s latest decision on monetary policy. If you’ve been living on a deserted island for the past month or so, you may not know that the current debate is whether the Fed will lower interest rates (for the first time since March 2020) by 25 basis points (bps) or 50 bps.
Currently, the Dow is +130 points, the S&P 500 is +20 and the Nasdaq +105. Bond yields are firming in the 3 1/2% ballpark — +3.621% on the 10-year and +3.596% on the 2-year. We remain un-inverted, but tighter, this morning.
August Retail Sales Stronger than Expected
The advance print (read: to be revised later) U.S. Retail Sales for August swung to a positive +0.1% from expectations of -0.2%. Analyst knew we’d cool off from the hottest monthly number of the year, which came in July — now upwardly revised to +1.1%, the highest level for Retail Sales since January of 2023.
Subtracting bigger-ticket auto sales, this number skews to +0.1%, which is actually 10 bps lower than the +0.2% analysts were expecting, and beneath the unrevised +0.4% from the previous month. Ex-autos and gasoline sales, we’re at +0.2% on today’s read, cut in half for the second-straight month — from +0.4% in July and +0.8% in June, which was also the highest since January 2023.
The core Control number, which finds its way up the food chain of economic data, including the Fed, reached +0.3% last month, down 10 bps to the upwardly revised +0.4% in July and the +0.9% in June. Electronics and appliances were down -1.1% in August, and Gasoline was also down. Non-Store Retailers gained +1.4% for the month.
How Will These Numbers Influence the Fed’s Decision?
Today’s Retail Sales numbers, like Empire State manufacturing data yesterday, point to an economy resilient enough to sustain a mere 25 bps cut tomorrow afternoon. Looking back to Consumer Price Index (CPI) figures last week, these were steady to slightly down month over month — also solid enough to not suggest a need for a deeper Fed rate cut.
Where the Fed may be swayed to cut 50 bps instead is in the notably eroding labor market. From November of 2023 through March of 2024 added an average +255K new jobs per month. In the subsequent five months, this number shrinks to 115K new jobs per month. This looks to be levels at best to be covering for the rate of retiring Baby Boomers per month.
In any case, expect the press release which accompanies the Fed’s decision — along with Fed Chair Jerome Powell’s press conference directly following — to address these myriad issues and the levels of concern the Fed has with each one.
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Advance Retail Sales +0.1%: A Notch for a 25 bps Cut
Tuesday, September 17th, 2024
Pre-markets are up a day prior to the Fed’s latest decision on monetary policy. If you’ve been living on a deserted island for the past month or so, you may not know that the current debate is whether the Fed will lower interest rates (for the first time since March 2020) by 25 basis points (bps) or 50 bps.
Currently, the Dow is +130 points, the S&P 500 is +20 and the Nasdaq +105. Bond yields are firming in the 3 1/2% ballpark — +3.621% on the 10-year and +3.596% on the 2-year. We remain un-inverted, but tighter, this morning.
August Retail Sales Stronger than Expected
The advance print (read: to be revised later) U.S. Retail Sales for August swung to a positive +0.1% from expectations of -0.2%. Analyst knew we’d cool off from the hottest monthly number of the year, which came in July — now upwardly revised to +1.1%, the highest level for Retail Sales since January of 2023.
Subtracting bigger-ticket auto sales, this number skews to +0.1%, which is actually 10 bps lower than the +0.2% analysts were expecting, and beneath the unrevised +0.4% from the previous month. Ex-autos and gasoline sales, we’re at +0.2% on today’s read, cut in half for the second-straight month — from +0.4% in July and +0.8% in June, which was also the highest since January 2023.
The core Control number, which finds its way up the food chain of economic data, including the Fed, reached +0.3% last month, down 10 bps to the upwardly revised +0.4% in July and the +0.9% in June. Electronics and appliances were down -1.1% in August, and Gasoline was also down. Non-Store Retailers gained +1.4% for the month.
How Will These Numbers Influence the Fed’s Decision?
Today’s Retail Sales numbers, like Empire State manufacturing data yesterday, point to an economy resilient enough to sustain a mere 25 bps cut tomorrow afternoon. Looking back to Consumer Price Index (CPI) figures last week, these were steady to slightly down month over month — also solid enough to not suggest a need for a deeper Fed rate cut.
Where the Fed may be swayed to cut 50 bps instead is in the notably eroding labor market. From November of 2023 through March of 2024 added an average +255K new jobs per month. In the subsequent five months, this number shrinks to 115K new jobs per month. This looks to be levels at best to be covering for the rate of retiring Baby Boomers per month.
In any case, expect the press release which accompanies the Fed’s decision — along with Fed Chair Jerome Powell’s press conference directly following — to address these myriad issues and the levels of concern the Fed has with each one.
Questions or comments about this article and/or author? Click here>>