18.07.25 - Retail revival: US consumers join the party

US retail sales rebounded in June, according to Thursday’s report from the US Commerce Department. Headline sales rose 0.6% month-over-month outperforming nearly all forecasts in a Bloomberg economist survey (consensus estimate 0.1%. This marks the first increase in three months.

Meanwhile, import prices rose just 0.1%, softer than the 0.3% consensus. This points to foreign exporters seem to absorb tariff costs by cutting their prices.

Markets: Markets continue to rise - US long-term yields trading around 4.45% - US dollar down - gold back above USD 3’350/oz - altcoins continue their rally

My view: The retail rebound is encouraging, but likely reflects confidence driven by market strength and could be another case of front-loaded consumer activity ahead of uncertainty.

The newly announced tariffs are set to take effect on August 1, unless trade deals are struck or the deadline is delayed, again. For now, soft import price data offers temporary relief, but it doesn’t remove the risk.

Someone will pay the tariffs. At this stage, it appears foreign producers are discounting exports to preserve market share. However, that’s unlikely to be sustainable. As earnings pressure builds, exporters will be forced to pass on costs, especially if tariffs widen or remain in place for longer.

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