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Retail Sales Easily Beat Expectations, US Treasury Yields Jump in Response

April retail sales come on on the hot side of economists' expectation. The Fed has work cut out for itself.
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Retail Sales from Commerce Department chart by Mish

Retail Sales from Commerce Department chart by Mish

Advance Retail Sales Key Points

  • Advance Estimates of U.S. Retail and Food Services Advance estimates of U.S. retail and food services sales for April 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $677.7 billion, an increase of 0.9 percent from the previous month, and 8.2 percent above April 2021. 
  • Retail trade sales were up 0.7 percent from March 2022, and up 6.7 percent above last year. 
  • Gasoline stations were up 36.9 percent from April 2021
  • Food services and drinking places were up 19.8 percent  from last year.  
  • The February 2022 to March 2022 percent change was revised from up 0.7 percent to up 1.4 percent.

US Treasury Yields 

US Treasury yields courtesy of Investing.Com

US Treasury yields courtesy of Investing.Com

Treasury yields of middle and long-end duration rose on the data. 

Advance Retail Sales Detail 

Retail Sales from Commerce Department chart by Mish

Retail Sales from Commerce Department chart by Mish

The three "free money" Covid stimulus jumps in April of 2020, January of 2021 and March of 2021 are clearly visible in the above chart. Retail spending did not cool after those jumps. 

A big picture helps explain inflation.

Advance Retail Sales 1992 to Present

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Retail Sales from Commerce Department chart by Mish

Retail Sales from Commerce Department chart by Mish

Covid seems to have accelerated retail sales. 

In reality, it was all the free money, eviction moratoriums, increased participants on SNAP (food stamps), and a stock market boom, now fading. 

These numbers are not really good news. The Fed will have to get in more rate hikes than I expected if spending holds up. 

This brings us back to Tweets of the Day: The Fed's Policy Is to Hurt and Credit Words of Warning

This post originated at MishTalk.Com.

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