Retail sales in September rose by 0.7% from August, the Commerce Department reported today. That was more than twice the Wall Street projection of 0.3% growth. I would note that these retail sales numbers are not adjusted for inflation. So yes, they may be surprisingly strong, given that Wall Street was expecting 0% growth once you subtract inflation. But they hardly indicate a “Nellie, bar the door” economic expansion.
Sales excluding auto and gas increased 0.6%, above estimates for a 0.1% increase, according to Bloomberg data. Meanwhile, August’s sales were revised up to 0.8% month-to-month increase from a previously reported 0.6% increase.
The results were enough to send Treasury prices down and Treasury yields up–again. As of 1 p.m. New York time the yield on the benchmark 10-year Treasury was up another 13 basis points to 4.83%. The yield on the 10-year Treasury is now up 49 basis point in the last month and 81 basis points in the last year.
The consensus theory on Wall Street about the timing of Federal Reserve interest rate moves is now no interest increase at the November 1 meeting (the CME FedWatch tool puts the odds of the Fed sending pat at 88%), and probably no rate increase at the December 13 meeting (odds of no move are now at 57.1% but the odds of a 25 basis point increase have climbed to 38.7% from 25.% on October 10), but the distinct possibility of an interest rate increase at the January 31 meeting (odds for a 25 basis point increase were at 41% today (with another 8.5% odds of two interest rate increases.) The odds of a 25 basis point increase on January 31 are up from 23.6% on October 10.
With bond prices taking another beating and yields climbing again, stock prices haven’t gone much of anywhere today with the Standard & Poor’s 500 up 0.1% as of 1:30 New York time and the NASDAQ down 0.12%.