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. After an unsteady start to 2019, subsequent months’ figures have been consistently positive. Apart from February, just one other month in 2019, September, recorded a decline.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales grew by 0.3% in December, in line with expectations and the same rate as in November. On an annual basis, the growth rate jumped to 5.8% from November’s rate of 3.3%.
ANZ FX strategist John Bromhead said, “The data show strong momentum in private consumption at year-end and the early evidence for 2020 is that the pace is spilling into the New Year.”
Treasury bond yields increased on the day, with larger movements at the front of the curve. By the close of business, the 2-year US Treasury yield had increased by 4bps to 1.58%, the 10-year rate had gained 3bps to 1.81% while the 30-year yield finished 2bps higher at 2.26%.
Expectations of a change in the federal funds rate in the next few months remained low. According to end-of-day prices of federal funds futures, the implied probability of a 25bps rate cut at either of the FOMC’s January or March meetings remained at zero.