Fed Policy Implications
The softer-than-expected retail figures provide additional evidence for the Federal Reserve to consider rate cuts. With inflation showing signs of moderation in recent reports, this underwhelming consumer spending data could push the FOMC toward a more accommodative stance. Rate markets responded immediately following the release, with futures contracts pricing in higher probabilities of cuts by mid-year. Treasury yields fell across the curve, with the most pronounced moves in the 2-5 year segment, reflecting revised monetary policy expectations.
Market Impact Analysis
This report carries significant cross-asset implications for traders. Bond markets rallied as yields declined on increased rate cut expectations. The dollar index retreated 0.3% against major currencies as growth differentials narr