Unemployment may be low in the U.S. but U.S. household spending went backwards again as vehicle sales fell nearly 1%. According to the latest “advance” sales numbers released by the U.S. Census Bureau, February retail sales shrank by 0.1%.
U.S. financial markets reacted by sending bond yields lower at the long end. By the end of the day, 2 year yields were 1bp higher at 2.26% while 10 year yields were 2bps lower at 2.82% and 30 year yields were 4bps lower at 3.06%. The U.S. currency was stronger against the euro, steady against the pound and weaker against the yen and Aussie.
The fall in total retail sales makes February the third month in a row of lower retail sales after the previous two months’ figures were revised. The decline is well below the market’s expectation of +0.3% and in line with January’s revised -0.1%. However, as sales figures fell heavily in February 2017, the 12-month growth rate actually increased from 3.9% to 4.0%.