Retail Revival: U.S. Consumer Spending Surges, Easing Recession Fears | Moomoo Research

In the vast ocean of the economy, data acts as a beacon guiding investors on their course. The U.S. retail sales data for July has shone a light on the market's concerns about an economic downturn, bringing a glimmer of warmth.

The U.S. retail sales data for July showed a 1.0% month-on-month increase, surpassing market expectations and our previous imaginations.

This figure not only significantly exceeded the expected 0.3% but also left the previous figure of -0.2% far behind. This naturally raises the question, what is the force behind this?

Firstly, the weak retail data in June undoubtedly provided a low base for the rebound in July. After being hit in June, automobile sales rebounded strongly in July, with a month-on-month increase of an astonishing 3.6%.

This is not only due to the base effect but also due to the stimulus of holidays such as Independence Day, as well as the repair of the real estate chain consumption brought about by the decline in mortgage interest rates.

Although the growth rate of personal consumption expenditure has slowed, its year-on-year growth rate is still higher than the average growth rate of the past few years.

This indicates that the basic face of the U.S. economy remains robust, and the resilience of the consumer market should not be underestimated. At the same time, despite fluctuations in the job market, this does not mean a signal of economic recession but rather a part of economic adjustment.

As inflation data cools and unemployment rates rise, the market generally expects the Federal Reserve to start an interest rate cut cycle in September. However, the strong performance of the retail data in July has somewhat cooled the market's expectations for a 50 basis point rate cut in September.

Data from CME FedWatch shows that the market's expectation for a 25 basis point rate cut in September has risen to 74.5%, while the probability of a 50 basis point cut has dropped to 25.5%.

The retail data for July undoubtedly gives us confidence, but as investors, we cannot be blindly optimistic. While enjoying the positive signals brought by the data, we must also be vigilant about potential risk factors. Whether the U.S. economy will fall back more than expected, and whether the geopolitical situation will evolve more than expected, these are all issues we need to continue to pay attention to.

We need to continue to focus on future economic data and market dynamics to provide a solid basis for investment decisions.