The US Commerce Department announced on the 14th that July retail sales came in at 763.602 billion dollars on a seasonally adjusted basis, down 0.6% from the previous month, missing market expectations for a 0.1% increase. This was the first decline in nine months, and the largest drop in one year and two months since the 1.1% fall in May 2025. Core retail sales, which exclude autos and auto parts, also fell 0.3% month-on-month, marking a second straight monthly decline and defying market expectations for a 0.2% rise. The control group, which excludes gasoline stations, autos and auto parts, building materials, and food services and drinking places, fell 0.4% from the prior month, so it is expected to weigh on personal consumption in the April-June quarter GDP. In the market, the view is spreading that the Federal Open Market Committee will keep the policy rate unchanged in September and October, and that a rate hike will come in December at the earliest.
Weak retail sales reduce likelihood of near-term rate hikes, pressuring policy rate expectations.
Weak retail sales lower growth outlook, pushing yields down.
