Online sales only bright feature in US retail carnage

15 May 2020

Summary:  April retail sales collapse; online sales get boost.

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 that year. Growth rates then increased in trend terms through 2019 and into early 2020, until restrictions on American households began to take effect in March.

According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales contracted by 16.4% in April. The fall was a much greater one than the -11% which had been expected and it was of a greater magnitude than March’s revised figure of -8.3%. On an annual basis, the growth rate fell to -21.6% from March’s revised rate of -5.7%.April retail sales collapse; online sales get boost, latest “advance” sales numbers released by the US Census Bureau,

The report came out on the same day as reports on job openings (JOLTS), consumer sentiment and industrial production numbers. US Treasury bond yields finished higher; the US 2-year Treasury yield remained unchanged at 0.15% while 10-year and 30-year yields both finished 4bps higher to 0.65% and 1.33% respectively.

In terms of US Fed policy, expectations of any change in the federal funds rate over the next 12 months remained fairly soft. However, OIS contracts from March 2021 onwards continued to imply a zero effective federal funds rate even after US Fed chief Jerome Powell recently repeated the Fed’s reluctance to embrace negative rates.