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Fed doves enlightened by weak US retail sales data – ING

FXStreet (Delhi) – James Knightley, Research Analyst at ING, notes that the US retail sales are disappointing, rising just 0.1%MoM in September versus 0.2% consensus while August’s growth rate was revised down two-tenths of a percent to flat.

Key Quotes

“The control group is down 0.1% versus +0.3% consensus with another two-tenth downward revision to August. This control group supposedly better matches consumer spending numbers that feed through into GDP. We had been looking for much better numbers given the firm consumer confidence data and robust auto volume sales.”

“Looking in the details auto sales did rise 1.8%MoM, but there were falls in electronics, building materials, grocery stores and general merchandise with a substantial 3.2% decline in gasoline station sales. This latter figure is due to price falls, but even so there is very little to be positive about in this report.”

“Meanwhile, the PPI report showed a distinct lack of inflation pressures with headline prices falling 0.5% MoM versus a -0.2% consensus prediction with the core rate – excluding food and energy – falling 0.3% versus an anticipated +0.1%.”

“These reports reinforce the view that the Federal Reserve won’t be doing anything later this month with analysts (including us) predicting a December rate hike really needing to see a very strong labour report next month to give them any confidence the Fed will hike in December.”

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