A decent core retail sales report, but momentum poised to slip

Wells Fargo Research Team Wells Fargo

Summary

Underlying details of the October retail sales report are in-line with our Holiday Sales forecast and slightly stronger Q4 PCE growth than the 1.0% rate we have in our current forecast. Look out though, higher frequency data points to some slippage in spending in November and December.

Strength beneath the headline

On the face of it, the retail sales report for October was a dud, but the underlying details offer more encouraging signals for Q4 consumer spending and an elevated starting point for the critical two-month stretch for holiday sales.

The headline miss (0.0%) is entirely due to autos, which slipped 1.6%, reflecting payback after a pull-forward ahead of tariffs and then expiring tax credits (chart). Ex-autos, sales surprised to the upside and control group sales, which track well with broader goods consumption, came in even stronger (up 0.8%), suggesting a more solid start to Q4 consumer spending than our 1% CAGR forecast accounts for.

Download The Full Economic Indicator

Author

Wells Fargo Research Team

Wells Fargo

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.