Market focus on US retail sales and consumer confidence – BBH

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 9, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Research Team at BBH, suggests that the US October retail sales report is the most important US economic report (due Friday) this week and the University of Michigan's consumer confidence data will also be closely watched by the investors.

    Key Quotes

    “The headline will be constrained by the drop in gasoline prices and the fact that the new cyclical high in auto sales sequentially was small. Overall retail sales capture about 40% of personal consumption in the US. However, for GDP purposes, items like gasoline, autos, and building materials are picked up in other time-series. This core measure that excludes them has been weak over the last couple of months and declined by 0.05% in September. Look for a snap back toward its long-term average (~0.25%).”

    “The University of Michigan's consumer confidence report often gets passing interest by market participants. However, this week's report will deserve somewhat greater attention. Here is why: last month's report showed the long-term (5-10 years) inflation expectations, which in the past Fed officials have cited, fell to its lowest level since 2002 (2.5%). Among the most powerful arguments against the Fed from tightening is that price pressures remain modest and below target. Separately, we note that the 10-year break-even has risen 12 bp since the Fed's late-October meeting and two bp since the mid-September meeting.”
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