US Treasury Yields Soar on Robust Retail Sales Data

US Treasury yields surged on Thursday, buoyed by a surge in market optimism following the release of data highlighting the resilience of the American economy. These positive economic indicators have effectively quelled recent concerns about an impending US recession.

Retail sales in the United States experienced a significant uptick in July, with this latest batch of economic data underscoring the robustness and vitality of the US economy.

This data directly contradicts market expectations from earlier in the month, which had anticipated a looming recession for the US economy. These pessimistic forecasts had emerged in the wake of the most recent US employment data released on the first Friday of August.

Retail sales climbed by 1.0% in July compared to the previous month’s 0.2% figure, comfortably surpassing market forecasts of 0.3%. Moreover, core retail sales (excluding auto sales) also rose 0.4% in July, exceeding market expectations of 0.1%.

These robust economic figures have led to a decrease in expectations of a 50 basis point interest rate cut by the Federal Reserve at its upcoming Federal Open Market Committee meeting on September 17-18. As a result, the probability of a rate cut has dwindled to 28%, down from the previous 75%.

Consequently, yields on 10-year US Treasury bonds climbed to 3.915%, up from the previous day’s closing of 3.851%. During Thursday’s trading session, yields touched a low of 3.823% and a high of 3.929%.