US Retail Sales Drop More Than Expected in July

Summary

US July retail sales fell 0.6% versus expectations for a 0.1% gain, but the details suggest one-off factors drove the drop. BofA's Aditya Bhave says the data does not change the bank's 75 basis-point Fed rate hike call and views July as a blip. Bloomberg's Michael McKee notes spending shifted among categories rather than collapsing, which may support the case for the Fed to hold rates.

• July headline US retail sales fell 0.6% versus a 0.1% gain forecast.
• The retail control group fell 0.4% and June was revised lower.
• Weakness was concentrated in autos, gas stations and non-store retailers.
• Clothing and other categories rose, suggesting a spending mix shift.
• Aditya Bhave says early August card data shows spending back near May/June strength.
• BofA keeps its call for 75 basis points of Fed rate hikes this year.
• Markets showed positive equity futures and lower Treasury yields.