U.S. Retail Sales Data Indicates Consumer Strength Amid Inflation Concerns

WASHINGTON, D.C. — U.S. Treasury yields remained unchanged Friday following strong retail sales data from July, which suggested a resilient consumer base. The yield on the 10-year Treasury note decreased slightly by 2 basis points to 3.719%, while the benchmark two-year yield held steady at 4.289%.

The U.S. Census Bureau reported that retail sales rose 0.5% in July, aligning with Dow Jones estimates. Sales excluding automobiles also increased by 0.3%, in line with expectations. This positive news contrasts with recent fears of rising inflation, particularly regarding possible impacts from tax changes and tariffs.

On Thursday, the producer price index (PPI) indicated a stronger-than-anticipated month-over-month increase of 0.2%, contributing to inflationary concerns among economists. Despite this, traders are pricing a 93% chance of an interest rate cut by the Federal Reserve in September, according to futures data.

This upcoming cut is fueled by the Federal Reserve’s ongoing assessment of the economy’s performance and inflation pressures, which will be a key topic at their annual meeting in Jackson Hole, Wyoming, next week. “The data indicates consumers are adapting well to economic shifts, but we remain cautious,” said an economic analyst.

The inflation conversation remains pertinent as markets digest the implications of the recent economic reports. Many investors are eyeing volatility as they await additional key U.S. economic data, which includes upcoming reports on the Empire State Manufacturing Index and Michigan Consumer Sentiment.

Regarding gold, prices bounced modestly on Friday, impacted by a weaker U.S. dollar. However, the recovery was limited, with gold trading around $3,343, facing difficulties breaking past the key resistance level of $3,350. Geopolitical events, including an upcoming summit between U.S. President Donald Trump and Russian President Vladimir Putin in Anchorage, Alaska, may also play a role in market dynamics.