"Strong US Consumer Spending Negatively Impacts Bond Market"

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There is an analysis that the pressure for bond yields to rise will continue until a slowdown in U.S. employment is confirmed. This is based on the judgment that the strength in consumption is not temporary.

On the 18th, Yoon Yeo-sam, a researcher at Meritz Securities, stated, "Until fiscal policy support and a slowdown in U.S. employment indicators are confirmed, U.S. consumption indicators could have a negative impact on the bond market, so caution is necessary."

Researcher Yoon explained, "The strong consumption in September is interpreted as not being a temporary factor," adding, "Since the debt ceiling negotiations in June, fiscal support has remained high, sustaining demand for high-priced durable goods such as automobiles."

U.S. retail sales in September rose 0.7% compared to the previous month. Core retail sales also increased by 0.6%. Both figures significantly exceeded expectations. Looking at the details, automobile sales contributed the most at 0.2 percentage points, followed by online sales at 0.18 percentage points and food-related sales at 0.17 percentage points. In particular, the recent controversial high costs related to dining out were also linked to retail sales.

However, Researcher Yoon emphasized, "While it is true that the nominal U.S. consumption appears strong, attention must be paid to the effect of increased nominal spending," adding, "Retail sales adjusted for inflation are recording a negative year-on-year figure compared to last year." This implies that excluding inflationary pressures, U.S. consumption may not be as strong as expected.

This is interpreted in the same context as the statement made the previous day (local time) by Richmond Fed President Barkin, who said, "The economy is showing less actual demand than it appears on the surface."

Additionally, Researcher Yoon pointed out, "U.S. industrial production also exceeded expectations, showing an overall favorable trend in the U.S. economy," and noted, "The impact of policy support should be examined together, considering the corporate investment support following the implementation of the Inflation Reduction Act (IRA) and the cyclical improvement due to the low macroeconomic costs in the first half of the year."

This content was produced with the assistance of AI translation services.