US retail sales disappoint, but the market doesn’t move
Facing an inscrutable economic picture the Fed will do as little as possible, or so the market believes
Retail sales for August came in considerably lower than expected, and July’s big gain of 0.6% was revised down to a modest 0.3%. Excluding autos and gas, retail sales were down 0.1% against an expected 0.3% gain. The headline number was down 0.2% compared to an expected 0.1% gain.
US bond prices were unchanged after the announcement. The euro is up on the day (from 1.192 at 4:00 a.m. to 1.198 at 8:35), but virtually all the gain occurred before the number came out.
The market’s insouciance in the face of an outsized headline inflation number yesterday and a disappointing retail number today has to do with the market’s estimation of the Fed: with a confusing and contradictory economic picture, the Fed will do as little as possible, the market believes.