US Retail Sales Miss Expectations

DATA RECAP: In what is likely little surprise to many, retail sales fell short of expectations across the board. The headline rate falling 1.1%, larger than the expected 0.3% drop. That said, the figures were not as dire as the BofA card data had suggested, having predicted a 2.3% drop in the headline. Of note, BofA card data has been rather accurate of late. Alongside this, the retail sales data also saw upward revisions to the prior month's figures. Therefore, while this data adds to the narrative of slowing economic activity in the US, this is unlikely to shift the outlook for the FOMC, given the major focus on jobs.

Economic Calendar

Source: DailyFX

MARKET REACTION: In reaction to the retail sales report, the USD rose against its major counterparts, particularly against the low yielders (JPY and CHF) as US yields ticked higher. However, while I continue to favor upside in the USD, my view is that this is better expressed against high-beta currencies (AUD, NZD, CAD) as opposed to safe-havens given the current fragile risk sentiment.

USD, US RATES & GOLD REACTION TO US CPI

Source: Refintiv

US Retailers Earnings Recap

Walmart Q2 earnings: Adj. EPS $1.78, exp. $1.57, revenue $141.05bln, exp. $137.14bln. The retailer had also upgraded its full-year forecast with strong growth stemming from its grocery business and back-to-school sales.