US Retail sales: American consumer does not look well

US trade policy has dominated the news and had an unsettling effect on global financial markets. With sentiment so poor, investors will have been hoping the mighty US consumer provides reassurance that all is well on Main Street. They didn’t find it, with retail sales coming in lower than expected the US consumer is starting to look a little peaky.

This puts the Federal Reserve in a tough spot. The hard data looks weak, and forward-looking data, like consumer and business confidence surveys, show conditions are deteriorating. In the short term, trade tariffs will surely stoke inflation. The key question is whether the recent data is weak enough to warrant additional interest rate cuts from the Federal Reserve. The bond market reaction today suggests it is not.