Tuesday, June 17, 2025
This morning, we see some important economic data hitting the tape. Pre-market futures are lower, but in fairness, they were lower before these reports came out. The Dow is currently giving back -180 points of its gains made yesterday, with the S&P 500 down -20 points and the Nasdaq -90. Bond yields are lower, but only slightly: the 10-year is +4.41%, the 2-year +3.94% and the 30-year yield is +4.92%.
Retail Sales Weaker than Expected for May
Headline
Retail Sales for last month was expected to swing to a negative print, but not this far: -0.9% is the lowest we’ve seen since January, and below the -0.6% consensus. The prior month swung from +0.1% originally reported to -0.1% on today’s revision. Auto Parts fell -3.5% for May, followed by -2.7% in Building Materials. Conversely, Sporting Goods grew +1.3% and Furniture +1.2%.
Removing big-ticket auto sales, this number ebbs to -0.3% — still worse than the +0.1% analysts were expecting. This follows a 0.0% print for April, which ticked down 10 basis points (bps) from +0.1% initially reported. Ex-autos & gas, -0.1% is what we see — a big swing from the +0.3% anticipated. The Control number, which finds its way up the food chain of other inflation metrics (such as next week’s PCE figures), was the sole bright spot here: +0.4%, up from April’s downwardly revised -0.1%.
Keep in mind there is plenty here reflecting the tariff realities in U.S. retail. For instance, headline month-over-month Retail Sales blossomed up +1.7%, in expectation of complications regarding tariffs President Trump had been promising. Thus, there is a “pull-forward” in effect with these May numbers; over time, we’ll be able to see more clearly how retailers are able to successfully price goods.
Imports & Exports Also Lower Last Month
Import Prices were unched for May: 0.0% versus expectations of -0.1% but down from the unrevised +0.1% from April. Still, this is an improvement from the -0.4% posted in March. Ex-fuel costs, +0.2% is the number — half what was posted a month ago, which incidentally was the highest figure registered since April of last year.
Export Prices, on the other hand, sank -0.9% last month — the worst print in over two years. Year over year, we see U.S. exports +1.7%, the lightest read of the year and 80 bps lower than the +2.5% analysts had been looking for. Again, we see a new global trade narrative emerging, though unfortunately for us it’s taking a big bite out of export pricing.
FOMC Meeting Starts Today; No Change Expected
We don’t see these lower numbers as enough to tip the scales in terms of the Fed deciding to cut interest rates at this time. As we say, we strongly suspect much of these aberrations are tariff-related; once the Fed has some clarity on global trade, it will have more confidence to adjust rates to both control inflation and foster full employment.
The Fed’s official decision comes out Wednesday early afternoon, along with a statement from the Federal Open Market Committee (FOMC) and a press conference with Chair Jerome Powell directly following. Currently, odds are sub-50% for a Fed cut until September, with a growing number of analysts now conceding there may be no rate cuts in 2025 at all.
Questions or comments about this article and/or author? Click here>>
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Retail Sales, Imports/Exports Reflect Tariff Realities
Tuesday, June 17, 2025
This morning, we see some important economic data hitting the tape. Pre-market futures are lower, but in fairness, they were lower before these reports came out. The Dow is currently giving back -180 points of its gains made yesterday, with the S&P 500 down -20 points and the Nasdaq -90. Bond yields are lower, but only slightly: the 10-year is +4.41%, the 2-year +3.94% and the 30-year yield is +4.92%.
Retail Sales Weaker than Expected for May
Headline Retail Sales for last month was expected to swing to a negative print, but not this far: -0.9% is the lowest we’ve seen since January, and below the -0.6% consensus. The prior month swung from +0.1% originally reported to -0.1% on today’s revision. Auto Parts fell -3.5% for May, followed by -2.7% in Building Materials. Conversely, Sporting Goods grew +1.3% and Furniture +1.2%.
Removing big-ticket auto sales, this number ebbs to -0.3% — still worse than the +0.1% analysts were expecting. This follows a 0.0% print for April, which ticked down 10 basis points (bps) from +0.1% initially reported. Ex-autos & gas, -0.1% is what we see — a big swing from the +0.3% anticipated. The Control number, which finds its way up the food chain of other inflation metrics (such as next week’s PCE figures), was the sole bright spot here: +0.4%, up from April’s downwardly revised -0.1%.
Keep in mind there is plenty here reflecting the tariff realities in U.S. retail. For instance, headline month-over-month Retail Sales blossomed up +1.7%, in expectation of complications regarding tariffs President Trump had been promising. Thus, there is a “pull-forward” in effect with these May numbers; over time, we’ll be able to see more clearly how retailers are able to successfully price goods.
Imports & Exports Also Lower Last Month
Import Prices were unched for May: 0.0% versus expectations of -0.1% but down from the unrevised +0.1% from April. Still, this is an improvement from the -0.4% posted in March. Ex-fuel costs, +0.2% is the number — half what was posted a month ago, which incidentally was the highest figure registered since April of last year.
Export Prices, on the other hand, sank -0.9% last month — the worst print in over two years. Year over year, we see U.S. exports +1.7%, the lightest read of the year and 80 bps lower than the +2.5% analysts had been looking for. Again, we see a new global trade narrative emerging, though unfortunately for us it’s taking a big bite out of export pricing.
FOMC Meeting Starts Today; No Change Expected
We don’t see these lower numbers as enough to tip the scales in terms of the Fed deciding to cut interest rates at this time. As we say, we strongly suspect much of these aberrations are tariff-related; once the Fed has some clarity on global trade, it will have more confidence to adjust rates to both control inflation and foster full employment.
The Fed’s official decision comes out Wednesday early afternoon, along with a statement from the Federal Open Market Committee (FOMC) and a press conference with Chair Jerome Powell directly following. Currently, odds are sub-50% for a Fed cut until September, with a growing number of analysts now conceding there may be no rate cuts in 2025 at all.
Questions or comments about this article and/or author? Click here>>