Retail Sales Strong; Control Group Stronger

Preface

U.S. retail sales came in better than estimates both for the overall number and the “control group” number which feeds into GDP.

• U.S. Retail Sales (MoM):

  • 0.6% vs 0.4% consensus and 0.2% prior.

• U.S. Retail Sales ex-Auto (MoM):

  • 0.4% vs 0.2% consensus and 0.2% prior.

• U.S. Retail Sales Control Group (MoM):

  • 0.8% and 0.5% prior.

  • Excludes autos and gas; "core sales."

  • Aligned with GDP

  • Considered predictive for trends

The U.S. economy continues to look strong... remarkably and even confoundingly.

This is not a debt catastrophe driven economy as the chart below shows:

• Household debt to GDP near all time lows (blue line)

• Household debt payments to income low to very low (red line)

The probability of a rate cut by the march FOMC meeting has now dropped to 58%.

Treasury yields are up on the day, in particular the 1- and 2-year yields, reflecting those lower odds of a rate cut in March:

That’s it! Have a great week.