In this morning’s data, Retail Sales for April increased 0.9% for the month, a bit less than expected, but the previous month was revised considerably higher. Motor Vehicle & Parts Dealers were strong rebounding from the previous month, while Gasoline Stations were weak. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 1.0% in April, more than expected and last month’s figure was also revised measurably higher.
Overall, decent retail sales numbers for April especially considering the increases in the revised figures for the previous month. In addition, consumers are likely shifting their buying habits amidst inflationary pressures as noted in the earnings results of Home Depot and Wal-Mart this morning. Home Depot increased this year’s outlook noting a fall in customer transactions but a sizable increase in the average purchase price of those transactions, while Wal-Mart noted higher costs of food and fuel put pressure on their margins. While the strength of the consumer is key for the economy in the months ahead, the Federal Reserve should remain on track for their expected policy tightening through interest rate increases and balance sheet adjustments.
In all, the 10-year US treasury yield ticks higher following the report and equity futures are also higher as we head into the market open.
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