U.S. July retail sales unexpectedly fell 0.6%, turning negative for the first time in nine months. After the data was released, the U.S. dollar index refreshed its lowest level since May. With consumption weakening alongside pressure on the dollar, market expectations for the Federal Reserve to cut rates have once again gained momentum. Expectations for macro liquidity have eased at the margin, providing interim support for risk assets.
In the short term, the weakness in retail data more likely reflects the suppression of demand for durable goods from high interest rates, rather than deterioration in the labor market. If subsequent Nonfarm Payrolls and CPI data jointly confirm the trend, the window for a rate cut in September may open further. #Macro
In the short term, the weakness in retail data more likely reflects the suppression of demand for durable goods from high interest rates, rather than deterioration in the labor market. If subsequent Nonfarm Payrolls and CPI data jointly confirm the trend, the window for a rate cut in September may open further. #Macro