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Market Data Broadly Better Than Expected, US Consumers Resilient

Strong Retail Sales Strengthen Case For No June Cut

In a fairly heavy data release day, the overall news was good, especially retail sales, which indicates US consumers are resilient in the face of trade worries. The Commerce Department said today that May retail sales rose 0.5%, after April’s gain of 0.3% which was revised up. Three major banks upgraded their Q2 GDP tracking forecast to 1.9% as the chances of the Fed easing in June have withered to nearly zero.

By category, electronics rose by 1.1%, auto dealers were up 0.7%, and a basket of online retailers rose 1.4%. Better consumer data has an inverse impact on equities as investors are betting on an interest rate cut of at least 25 basis points, maybe 50, by July.

There was a five basis point easing for the June FOMC meeting that should be reduced as the market prices out the probability of a June cut.

US, Global Equities Off

US and global stocks were down slightly, while oil was up based in part on the attacks on tankers in the Strait of Hormuz, the gateway for all Middle Eastern oil to the Western world, but gains were tempered on lower demand. Gold was up, with investors such as bond king Jeffrey Gundlach calling for recession.

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