Rate Expectations Are Trimmed Following US Retail Sales – US Market Wrap

The world’s biggest bond market got hit as a solid retail sales report had traders trimming their bets on Federal Reserve rate cuts this year.

Treasury yields climbed as the economic figures fanned doubts over how quickly the central bank will ease policy. Swap contracts priced a total of 42 basis points of rate reductions over the November and December meetings. An advance in equities fizzled out after the S&P 500 hit fresh all-time highs. In late trading, Netflix whipsawed following its earnings report.

US retail sales strengthened in September by more than forecast in a broad advance, illustrating resilient consumer spending that continues to power the economy. The data followed a blowout jobs report and a hotter-than-estimated consumer inflation print released earlier this month that only reinforced the view the economy is nowhere near a
recession.

The S&P 500 and the Nasdaq 100 were little changed. The Dow Jones Industrial Average added 0.4%. NVIDIA gained after a bullish outlook from Taiwan Semiconductor Manufacturing Co.

Treasury 10-year yields advanced seven basis points to 4.09%. The euro fell as traders added to bets the European Central Bank will need a bumper rate cut in December. The yen slid to touch the key psychological level of 150 per dollar, bringing the risk of intervention by Japan back into focus.