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. Subsequent sales figures formed a downtrend which brought the annual rate below 2.0% by the end of the year. Growth in the March quarter was quite strong but the conditions which produced those results may not have spilled into April.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales declined by 0.2% in April, well under the +0.2% which had been expected and a marked reversal from March’s revised figure of +1.7%. On an annual basis, the growth rate slowed to 3.1% from March’s revised rate of 3.8%.
Financial markets reacted by sending bond yields lower. By the end of the day, yields on 2-year, 10-year and 30-year Treasury bonds were all 3bps lower at 2.16%, 2.38% and 2.82% respectively. However, prices in the futures market for federal funds reacted in a different manner and the likelihood of a lower rate after the FOMC’s December meeting was trimmed from 75% to 71%.
