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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
US OUTLOOK/OPINION
- The health of the consumer is therefore likely to garner as much attention as inflation and possibly more so, barring any major surprises in the latter.
- Nominal consumer spending is seen rising 0.5% M/M as it easily outstrips personal income growth of 0.2% M/M.
- That should push the saving ratio back close to 3.0%, closer to lows seen in 2022 having been 4.0% in January and 5.3% in mid-2023. With theoretical “excess savings” accumulated through the pandemic having either been recently or nearly exhausted depending on trends/methods used, this suggests limited scope for a continuation of what has been a tailwind to consumption.
- With headline PCE inflation estimated at 0.2% M/M, it would see real consumer spending rising 0.3% M/M for a third solid month (0.2% in June and 0.4% in May) to leave 3m/3m growth at 2.9% annualized.
- The expected strength in July follows the surprisingly strong advance retail sales report when nominal sales jumped 1.0% M/M (cons 0.4). The core readings also impressed with ex-auto sales rising 0.4% after 0.5%, ex-auto/gas up 0.4% after 0.8% and the key Control Group up 0.3% after 0.9%.
- Goods consumption will be expected to show signs of strength in July then, although it has been particularly volatile in recent months (0.25% in Jun after 0.9% in May, -0.45% in Apr and 0.7% in Mar). Services consumption meanwhile, some two thirds of consumer spending, has been somewhat reserved at an average 0.17% M/M over the past four months.
- A strong report would help push back on recessionary fears and could see a re-pricing of the more than 100bp of cuts priced over the three remaining meetings, albeit limited by markets keenly awaiting next week’s payrolls report. On the flip side, we expect particular sensitivity to any surprisingly sluggish readings in discretionary services-related spending.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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