ZINGER KEY POINTS
- U.S. retail sales stagnated in June 2024, as expected, weighed down by drops in gasoline item.
- June retail sales, excluding gasoline, motor vehicles and parts, rose by 0.8% month-over-month, outperforming expectations.
U.S. retail sales stagnated on a month-over-month basis in June 2024, declining from upwardly revised 0.3% growth in May to zero growth and matching the forecasted flat reading, according to preliminary estimates released Tuesday.
Fed futures indicate a 100% likelihood of a rate cut in September, according to the CME Group‘s FedWatch tool. Traders assign an 88% probability to a 25-basis-point rate cut and a 12% probability to a 50-basis-point rate cut.
On Monday, Fed Chair Jerome Powell sounded more dovish than anticipated, suggesting that recent inflation reports show welcome progress toward the 2% target, increasing confidence that policymakers may be inclined to lower interest rates.
Powell also mentioned that an unexpected weakening in the U.S. labor market could be a factor prompting the Fed to take action.
June Retail Sales Report: Key Highlights
- On a year-over-year basis, retail sales rose by 2.3% in June, slowing from an upwardly revised 2.6% in May.
- Excluding motor vehicle and parts, retail sales increased by 0.4% month-over-month, up from 0.1% in May and topping the expected 0.1%, according to TradingEconomics data.
- Excluding gasoline, motor vehicle and parts, retail sales rose 0.8% month-over-month in June, beating expectations of 0.2% growth and advancing from an upwardly revised 0.3% gain in May.
- Among different spending categories, the largest monthly increases were seen in nonstore retailers, with a 1.9% rise, followed by building material, garden equipment and supplies dealers, up 1.4%.
- The largest monthly drops were seen in gasoline stations, down 3%, and motor vehicle and parts dealers, down 2%.
Market Reactions: Dollar, Treasury Yields Slightly Rebound
Following the release of June retail sales data, the U.S. dollar strengthened and Treasury yields trimmed session losses.
The U.S. Dollar Index rose 0.2%.
Treasury yields were down by 3 basis points in the long end, with the 30-year yield hovering at 4.44%.
Futures on major U.S. averages traded higher during Tuesday premarket trading. Contracts on the S&P 500 were 0.4% higher by 8:40 a.m. ET.
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Originally Posted July 16, 2024 – June Retail Sales Stagnate: Traders Fully Price In September Interest Rate Cut
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