The Morning View: August 15, 2019

  • August 15, 2019

BY: MARSHALL BARTLETT
Senior Vice President / Portfolio Manager

Announced this morning, Retail Sales increased 0.7% in July, stronger than forecasts. The increase was driven by strength in non-store retailers, gasoline stations, and electronics. The Control Group, which excludes sales for food, autos, building materials and gas stations, increased 1.0% in July, also above forecasts. A welcomed strong retail report, indicating the U.S. consumer remains healthy in the current environment. Given consumer spending comprises close to 70% of GDP, this strength should provide some support to the U.S. economy. Meanwhile, markets continue to digest an escalation in the trade rhetoric between the U.S. and China as well as a brief inversion in the 2 to 10 year yield this week. Both of these items underscore difficulties in international markets and give the Federal Reserve even more to contemplate as they navigate their “mid-cycle adjustment” to interest rate policy. In all, following the retail sales report, bond yields ticked higher and equity futures are also higher heading into the market open.

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