Retail Sales Rebound In April; Investors Widely Expect Fed Pause In June

Retail sales increased 0.4% in April on a month-over-month basis, according to the advance estimates released Tuesday, rebounding from a revised 0.7% decline recorded in March but falling short of the expected 0.8% increase.  

US April Retail Sales: Key Takeaways

• Seasonally adjusted advance estimates of U.S. retail and food services sales for April 2023 came in at $686.1 billion, up 0.4% on the month and 1.6% year-over-year. The monthly print was below economists' expectations of an 0.8% increase. 
• Retail sales bounced back in April after two consecutive months of decline in which they fell by 0.7% in February and 0.7% in March.
• Core retail sales, which excludes motor vehicles and parts, rose 0.4% monthly, as expected, after having fallen 0.5% in March and 0.6% in February. In annual terms, core retail sales were 2.1% higher.
• Excluding gasoline stations, core retail sales were 0.6% month-on-month higher in April, and up 4.3% from a year ago.  
• Among different spending categories, the biggest monthly increases were recorded in miscellaneous store retailers and nonstore retailers, up by 2.4% and 1.2% on the month, respectively. 
• The most significant monthly drags were observed in sporting goods, hobby, musical instrument and book store category and gasoline stations, which fell by 3.3% and 0.8% on the month, respectively.

Market Reactions

• The dollar edged higher, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.6%.
• Investors maintaned unchanged Fed rate expectations for June, assigning an 85% chance of a rate hold, according to CME Group Fedwatch. 
• Futures on the S&P 500 index, which is closely tracked by the SPDR S&P 500 ETF Trust SPY, tilted lower by 0.1%. 
• Treasury yields slightly rose, with the 10-year yield rising 2 basis points to 3.52% and the two-year yield up 1 basis point to 4.02%
• Gold, which is tracked by the SPDR Gold Trust GDL, rose 0.2%. 

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