United States Retail sales data will be announced this Wednesday, it is expected to raise by 6.9% year-on-year and it is expected to raise 1% in October. Retail sales in the US rose by 8.2 percent year-on-year in September 2022. it was unchanged in September 2022, missing market expectations of a 0.2 percent advance, as high inflation, and rising borrowing costs hit consumer demand.
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US retail sales stalled last month as shoppers grew more guarded about discretionary purchases amid the worst inflationary environment in decades and rising interest rates.
American retailers are sitting on so much inventory that brands particularly for apparel and housewares have resorted to listing their goods on resale websites, hosting sample sales, giving stuff to employees, offering deep discounts, and even throwing goods away. many Americans are still relying on credit cards and savings to keep up, and shelling out more on essentials leaves little leftover for discretionary purchases.
US consumer inflation expectations in the short and long run increased in early November, while sentiment retreated to a four-month low amid rising borrowing costs. Consumers expect prices will climb at an annual rate of 3% over the next five to 10 years, up from 2.9% in October and the highest in five months, the University of Michigan’s preliminary November survey showed Friday. They see costs rising 5.1% over the next year, compared to last month’s 5%.
Following the US CPI report, Fed overnight indexed swaps are pricing virtually zero probability of a 75-basis point hike in December, which would be a step down from the four consecutive 75-basis point Fed rate hikes so far. Traders lowered the odds of another three-quarter-point rate boost in December after the data. Investors bet that the Fed will pivot away from tightening monetary policy and shift from interest-rate increases to rate cuts as early as next year. Current market expectations for the path of the Fed Funds Rate is 50 basis points in December 2022 to reach 4.25%-4.50%, 25 basis points in Feb 2023, and another 25 basis points in Mar 2023 to peak around 4.75%-5.00% then Pause, and the Fed will begin Rate cuts start in Nov 2023, continue in 2024.
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