Debt ceiling talks still in limbo
US House Speaker McCarthy gave mixed comments on the debt ceiling talks. He said they set the stage to carry on further conversations and President Biden agreed to appoint a couple of people from the administration to negotiate directly with his team. McCarthy also said there is a lot of work to do in a short amount of time and that they are still very far apart but added it is possible to get a deal by the end of the week and it is not that difficult to reach an agreement. However, McCarthy later said he is not more optimistic about getting a deal by the end of the week. President Biden is set to return early from the G-7 meeting this coming weekend for more meetings next week.
US retail sales brings no glaring concerns on consumers
Headline retail sales came in beneath analyst expectations at 0.4% MoM (exp. 0.8%) but pared some of the 0.7% decline seen in March. Although the headline missed, the internals were more encouraging with ex-autos at 0.4% (exp. 0.4%, prev. -0.5%), while the ex-gas and autos rose 0.6%, above the prior -0.5% and expected 0.2%. Meanwhile, the control group, which feeds into GDP data, saw a strong reading at 0.7% MoM, above the 0.4% forecast and prior -0.4%. Discretionary categories such as clothing, electronics and sporting goods were all in the red while spending at restaurants and bars was still strong. While the report showed no signs of immediate concerns on the state of the consumer, there are some shifting consumption patterns suggesting caution in consumers as banking concerns and debt ceiling talks underpin. Meanwhile, US industrial production for April rose 0.5%, above the expected 0%, although the March data saw a revision lower to 0% from +0.4% after flatlining in February too.
Fed speakers remain mixed
A number of Fed speakers were on the wires on Tuesday, and many of them pushed for more rate hikes. Thomas Barkin (non-voter) said he is still not convinced that inflation is defeated and would be "comfortable" with more increases. Loretta Mester (non-voter) said she thinks rates aren't yet sufficiently restrictive. Lorie Logan (voter) was neutral and noted that a slower pace and vouched for a slower pace considering stability risks. John Williams (voter) was less hawkish, highlighting that the demand and supply in the economy is moving back into a balance as Fed hikes filter through the economy. Clearly, most voters are turning cautious while the other members on the committee still see further interest rate hikes.
US House Speaker McCarthy gave mixed comments on the debt ceiling talks. He said they set the stage to carry on further conversations and President Biden agreed to appoint a couple of people from the administration to negotiate directly with his team. McCarthy also said there is a lot of work to do in a short amount of time and that they are still very far apart but added it is possible to get a deal by the end of the week and it is not that difficult to reach an agreement. However, McCarthy later said he is not more optimistic about getting a deal by the end of the week. President Biden is set to return early from the G-7 meeting this coming weekend for more meetings next week.
US retail sales brings no glaring concerns on consumers
Headline retail sales came in beneath analyst expectations at 0.4% MoM (exp. 0.8%) but pared some of the 0.7% decline seen in March. Although the headline missed, the internals were more encouraging with ex-autos at 0.4% (exp. 0.4%, prev. -0.5%), while the ex-gas and autos rose 0.6%, above the prior -0.5% and expected 0.2%. Meanwhile, the control group, which feeds into GDP data, saw a strong reading at 0.7% MoM, above the 0.4% forecast and prior -0.4%. Discretionary categories such as clothing, electronics and sporting goods were all in the red while spending at restaurants and bars was still strong. While the report showed no signs of immediate concerns on the state of the consumer, there are some shifting consumption patterns suggesting caution in consumers as banking concerns and debt ceiling talks underpin. Meanwhile, US industrial production for April rose 0.5%, above the expected 0%, although the March data saw a revision lower to 0% from +0.4% after flatlining in February too.
Fed speakers remain mixed
A number of Fed speakers were on the wires on Tuesday, and many of them pushed for more rate hikes. Thomas Barkin (non-voter) said he is still not convinced that inflation is defeated and would be "comfortable" with more increases. Loretta Mester (non-voter) said she thinks rates aren't yet sufficiently restrictive. Lorie Logan (voter) was neutral and noted that a slower pace and vouched for a slower pace considering stability risks. John Williams (voter) was less hawkish, highlighting that the demand and supply in the economy is moving back into a balance as Fed hikes filter through the economy. Clearly, most voters are turning cautious while the other members on the committee still see further interest rate hikes.