US: Focus on retail sales and industrial output figures

Ahead of the weekend the US reports a slew of data and the most important are the August retail sales and industrial output figures, suggests the analysis team at BBH.

Key Quotes

“We suggest there is upside risk to the median forecast that US retail sales rose 0.1% August. That risk stems partly from prices, like gasoline, and partly from volume, as the Redbook weekly figures have been rising. The market has already seen that auto sales were softer.”

“Industrial output is also expected to have risen 0.1%. Here, although the bar is low, we are concerned about downside risks stemming from auto related output and some slippage from the energy sector. Manufacturing itself may have fared better. Recall manufacturing employment rose by 36k in August, the largest increase since August 2013, which itself was the largest since March 2012. Many economists are puzzled by the lack of more robust investment given the low interest rates. We are struck by the relatively low capacity utilization given the maturity of the expansion cycle. Capacity utilization rate was 76.7% in July and is expected to be unchanged in August.”

“The US also reports the Empire State manufacturing survey for September. It will be overshadowed by the retail sales report. Later, the University of Michigan's consumer sentiment and inflation expectations survey will be released. The long-term inflation expectation stood at 2.5% in August. It is expected to be unchanged. It has not been above 2.6% since March 2016. It has not been below 2.4% this year. This seems like the definition of stability.”

“US rates remain elevated. The 10-year stands near 2.20%, while the 2-year stands near 1.38%. The 2-year premium to Germany is around 207bp, nearly the highest since April 10. Bloomberg estimates the odds of a December Fed hike have risen to 50%. Today’s data will help determine if these US rate trends can be maintained.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.