US retail sales had been trending up since late 2015 but, beginning in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate which brought the annual rate below 2.0% by the end of the year. Growth rates then increased in trend terms through 2019 into early 2020.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales shrank by 0.5% in February, well under the +0.2% which had been expected and less than January’s revised increase of +0.6%. On an annual basis, the growth rate fell for a second consecutive month, this time to 4.3% from January’s revised rate of 5.0%.
The report came on the same day as January’s JOLTS report and February’s industrial production figures were released. Bond yields jumped across the curve but probably more as a result of a general move in financial markets. By the close of trade, the 2-year Treasury yield had gained 13bps to 0.49%, the 10-year had jumped a massive 35bps to 1.08% while the 30-year yield finished 36bps higher at 1.68%.
In terms of US Fed policy, a rate change of any sort remained unlikely given the federal funds rate has been at the effective lower bound since the US Fed made its second emergency cut for the month on Sunday 15 March.