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US Consumer Spending in Focus for Friday

CREDIT MACRO
  • US February Personal Income & Spending alongside Core PCE will still print on Friday - its been a weak run (vs. expectations) for US nominal retail sales this year (Control group MoM; Jan -0.3%, Feb 0%) - which was echoed on some weak guidance from US retailers Nike (-7%) & Lululemon (-16%) on Friday.
  • Both were mixed on sales outside US, Nike management giving little colour; "we're thinking about the geography splits is we're not assuming that economic conditions in the international markets in particular get better." while Lululemon was optimistic "we have seen a slower start to Q1 in the US, while we continue to see strength in all other regions" & guided positively to China.
  • Kering (parent of Gucci) did guide to weak APAC sales last week that led to a equities/credit sell-off but analyst did seem skewed to read this as Gucci brand specific issue. Other luxury retailers' equities were mixed, Burberry was notable underperformer down -7% but has elevated exposure to the region (bbg; 42% of FY23 sales).
  • As a positive Real UK retail sales did surprise to the upside last week (+0.2% MoM vs. c -0.1% MoM) - our analyst read was "the bigger picture is retail sales are broadly flat over the past 3m/3m period - and GDP growth for Q1 is expected by both the BOE and market to also be close to flat." Feb EU retail sales comes next week.
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  • US February Personal Income & Spending alongside Core PCE will still print on Friday - its been a weak run (vs. expectations) for US nominal retail sales this year (Control group MoM; Jan -0.3%, Feb 0%) - which was echoed on some weak guidance from US retailers Nike (-7%) & Lululemon (-16%) on Friday.
  • Both were mixed on sales outside US, Nike management giving little colour; "we're thinking about the geography splits is we're not assuming that economic conditions in the international markets in particular get better." while Lululemon was optimistic "we have seen a slower start to Q1 in the US, while we continue to see strength in all other regions" & guided positively to China.
  • Kering (parent of Gucci) did guide to weak APAC sales last week that led to a equities/credit sell-off but analyst did seem skewed to read this as Gucci brand specific issue. Other luxury retailers' equities were mixed, Burberry was notable underperformer down -7% but has elevated exposure to the region (bbg; 42% of FY23 sales).
  • As a positive Real UK retail sales did surprise to the upside last week (+0.2% MoM vs. c -0.1% MoM) - our analyst read was "the bigger picture is retail sales are broadly flat over the past 3m/3m period - and GDP growth for Q1 is expected by both the BOE and market to also be close to flat." Feb EU retail sales comes next week.