Source: Golden Ten Data
This figure bodes well for the US economy, but it is “bad news” for traders who expect the Federal Reserve to cut interest rates as soon as possible.
The increase in US retail sales data for March exceeded expectations. The previous month's data was revised higher, showing the elasticity of consumer demand, which may support the strong economic growth of the US in the first quarter.
According to data released by the US Department of Commerce on Monday, the monthly retail sales rate in the US recorded 0.7% in March, exceeding market expectations of 0.3%, a record high since September last year. The monthly retail sales rate for February was revised from 0.6% to 0.9%. This indicates that the unexpected decline of 1.1% in January was not so much a trend as an anomaly.
After the retail sales data was released, spot gold fell by 6 US dollars in the short term and is currently recovering; the US dollar index rose 20 points in the short term, breaking the 106 mark. EUR/USD and GBP/USD fell more than 20 points in the short term.
Most US Treasury yields climbed to new highs since the beginning of the year. The 2-year US Treasury yield was close to 5%, and the 10-year US Treasury yield rose 10 basis points to 4.62%, the highest level since November 14 last year.
Retail sales increased 1.1% compared to the group in March, the biggest increase since the beginning of last year. The data may bode well for first-quarter GDP, especially after the February data was raised.
Eight of the 13 categories saw growth, with e-commerce leading the way. As prices rose, gas station revenue increased while car sales declined.
The report also indicates that consumer spending will maintain a strong momentum as we enter the second quarter. As long as a strong labor market supports household demand, inflation is likely to become entrenched and further delay the Federal Reserve's interest rate cuts.
Currently, the market's general expectations for US economic growth in the first quarter have risen, and new jobs in the job market continue to exceed previous expectations.
Meanwhile, recent inflation data shows that price increases have not slowed as quickly as initially hoped. Inflation is higher than expected, and the economy is still growing. This has convinced economists that the Federal Reserve can wait a while before cutting interest rates without causing the economy to fall into recession.
Market expectations for monetary policy have shifted to the Fed's interest rate cut later. Officials say interest rate cuts require a higher degree of confidence that inflation is continuing to rise towards the 2% target. Traders no longer fully expect the Federal Reserve to cut interest rates before November; at the beginning of this year, the market fully priced interest rate cuts starting in March.
While the “horror data” was released, New York Federal Reserve Chairman Williams recently stated that he believes interest rate cuts may still begin this year, and that he does not think the recent inflation data is a “turning point.”
Editor/jayden