What's going on?
Disappointing data from U.S. retailers caused U.S. dollar and Treasury yields to decline today. Traders point to this data as a cause for the Fed to push back the point when they may start to raise interest rates. Retail sales in March rose .9% from February, which is the biggest rise in a year, but well below what analysts were expecting.
What does this mean?
A rise in retail sales is good news, providing evidence that consumer spending is increasing which is a sign of economic strength. The markets were mixed because, even though, the retail spending increased, it failed to meet analyst’s expectations. Furthermore, core sales, which are a measure of retail sales that do not take the more volatile elements into consideration, only rose .3%, while analysts expected them to rise .5%. The retail data resulted in the dollar decreasing in value, as well as the bond market falling and gold increasing slightly in price. International markets saw the FTSE and Hang Seng down slightly while the Shanghai Composite rose.
Why should I care?
Disappointing retail data could point to a number of underlying issues in the U.S. economic recovery, but it is also important to consider that the data didn’t meet analyst expectations but was actually the biggest rise this year in growth. Markets stagnating general result in a holding period in investments until there are signals that the markets will go one way or the other. China’s growth falling to potentially below 7% might create a stock sell-off in the Shanghai markets, and should be watched closely.