This will be an unusual trading week in the US with a holiday in the middle of it on Wednesday.
Before that, we’ll get the most important data of the week with the May US Retail Sales report. The consensus is for a rise of 0.2% after a flat figure in May.
The question on my mind is whether we will shift into a situation where the market becomes increasingly concerned about growth in the US and begins to worry that the Fed is falling behind the curve. There will be evidence of this in the market’s reaction to any data because over the last 18 months there has been a theme of trading bad news for good news and I’m not sure that will continue over the summer.
Digging deeper into the report, the most important measure will be the control group, or retail sales excluding automobiles, gasoline, and building materials. It is expected to rebound by 0.4% after a 0.3% decline in April.
Bank of America is relatively optimistic about the number, seeing a 0.6% rise in the control group with some help from seasonal factors. However, their card data was weak in several areas, including apparel, restaurants and general merchandise, with total spending down a seasonally adjusted 0.9% month over month. However, if you look at the April data, it is more correct than the static reading in the official report. This could mean some statistical noise, revisions, or recovery for May.
Companies have so far not provided much evidence of a slowdown in US consumption, and there is plenty of room for strong spending from accumulated household wealth, low interest rates on fixed mortgages, and stock market gains.
Looking ahead, Bank of America reported today that card spending rose 1.6% year over year in the first week of June.