Retail Not Giving In
The biggest piece of economic news for the week just released, have a chance of swaying the Federal Reserve’s next decision on interest rates. Following the trend of stronger readings from both the labor market and inflation, retail sales for the month of September came in far hotter-than-expected. Retail sales for the month rose 0.7%, well above the Dow Jones estimate of 0.3%. When excluding the automobile sector, retail sales still ran at 0.6% which was greater than forecasts of 0.2%. One of the leading pieces fueling this growth in sales was gas stations, with sales growing 0.9% during the month. However, the single biggest contributor to the rise was miscellaneous store retailers, increasing by 3% through September.
With inflation in the form of the consumer-price index reaching growth of 0.4% for the same month, consumers had not only kept up with growing prices but ended up buying more in the end. With that in mind, the Federal Reserve would then have no reason to loosen monetary policy in the coming months, an idea that sent investors back into the bond markets. The 10-year U.S. Treasury yield reached over 4.8% again this month, reflecting the long-term worry over interest rates that Americans currently have. Although inflation and the labor market were higher than expected, these figures have shown consistent cooling relative to a strong consumer, which continues to spend despite the higher prices. This will be a problem the Fed will have to attack come November 2nd at the next FOMC meeting.
Want to learn how to invest? Download the Invstr app, where you can play Fantasy Finance and manage a virtual investment portfolio or open a brokerage account and invest for real. Take our interactive investing course on Invstr Academy and become a better investor today!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.