From our colleagues at our sister company, Argent Trust:
Announced this morning, Retail Sales for October increased 1.3%, higher than expected and a solid rebound from the prior reading. In the month, Gasoline Stations, up 4.1%, Food Services & Drinking Places, up 1.6%, and Food & Beverage Stores, up 1.4%, were all relatively strong, while General Merchandise Stores, down -0.2%, were weak. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.7% in October, much higher than expected and the previous month was also revised two tenths higher.
Overall, headline retail sales rebounded strongly in October and the control group was also markedly higher, even as the Federal Reserve continues to tighten monetary policy. However, as personal savings wanes and credit defaults increase it could become more difficult for consumers to cope with inflation. Comments in recent quarterly results from Walmart and Target note discretionary categories have lagged and consumers are using discretion for big purchases and are trading down in assorted items. Given these dynamics, the speed at which inflation falls coupled with the strength of the labor market will be key for the consumer and the economy in the months ahead.
In all, the 10-year US treasury yield initially moved higher following the report but is now ticking lower and equity futures are also lower as we head into the market open.
This material is intended to be for informational purposes only and is intended for current or prospective clients of Argent Trust Company. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice, and does not take into account all the circumstances of each investor. Forward-looking assumptions are Argent Trust Company’s current estimates or expectations of future events or future results based on proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information. Investments can go down as well as up. Past performance is not a reliable indicator of future results.