Retail Sales Pointing To Lower Spending By Weakening Economic Structure

By Seb of The Private Banker

Friday, April 14, 2023 10:47 AM EST

Retail sales in the US fell by about 1% in the month-to-month data in March. Following sectors seen the biggest declines in sales:

gasoline stations (-5.5%)
general merchandise stores (-3%);
building materials and garden equipment (-2.1%);
electronics and appliances (-2.1%);
clothing (-1.7%);
motor vehicle dealers (-1.6%);
furniture (-1.2%).

Retail sales, excluding gas and autos, declined 0.3 percent over the previous month in March and ex auto fell by about 0.8% to the prior month.

The data may hint to a weakening economic structure by lower spending due to the elevated interest rates which prompts central banks to eventually ease the monetary tightening as the current projections show a dovish tone with one more interest rate hike of about 25 bps in May.

Stock market indexes in the US soared due to dovish aspects of the data and the New York trading opening buying auction. However, the market may work its way back into today’s balanced price range to conclude a bearish bias with a higher dollar for the session. Seemingly absorption hit the market around the highs which could lead market participants to liquidate the long positions for profiting.

Production data suggest a mixed view with a 0.4% rise in the industrial sector and a decline of about 0.5% in the Manufacturing sector month-to-month in March. Higher production data could fight inflation, therefore it might turn to be bullish with initiated buying in the early New York trading opening range while lower production data with lower supply lead to elevated prices pressures, bearish for equities for the moment due to the inflationary effect.

Looking at the E-mini S&P 500 index we can identity absorption around the highs by long liquidations which led the market back into the balanced price range from the European trading session, hence the previous VWAP close level around $4150 might be a level of interest to target for sellers while the current DVAL support in the auction lower.

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