Daily Commentary BY THE CURVE TEAM –

Retail Sales Surge

13th of January, 2020

Retail sales surged in November as was widely expected. The real litmus test is still to come.

The market had been expecting November to be a fruitful one for retailers on the back of sales events that have become the norm the past couple of years. The actual jump of 0.9% would have still been somewhat of a surprise, coming in more than double the median market expectations.

Spending on apparel and at department stores were the big winners for the month, jumping 3.1% and 3.4% respectively, suggesting Black Friday and Cyber Monday sales events could have had a significant impact. After a run of weak outcomes leading up to November, the key will be whether the pick up can be sustained.

Market pricing for the cash rate was little changed following the data suggesting it was seen as a one off boost and is not expected to be a sustained shift towards stronger consumption patterns.

Offshore and the non-farm payrolls report was the key data release heading into the weekend. On the surface, the data was a little weaker than expected. New jobs growth came in short of expectations, while wage growth was also slower than expected. Underemployment fell further, suggesting the labour market in the US continues to tighten, which will be enough to keep the Fed on hold for now.

David Flanagan

Director - Interest Rate Markets