U.S. Indices were rangebound on Tuesday, as traders await the pivotal FOMC meeting on Wednesday, with them widely expected to cut by 25bps, but there remains an outside risk of a larger cut, and attention will be accompanying commentary and updated SEPs. US data came in the form of Retail Sales, which printed above expectations across the board. Import/Export Prices came in hotter than expected, and Industrial Production unexpectedly rose in August. In the wake of the data, the Atlanta Fed Q3 GDPNow model was revised up to 3.4% from 3.1%. Sectors were mixed, with Energy the clear outperformer and buoyed by the gains in the crude complex after Russia’s Transneft reportedly told producers it is restricting oil storage in its systems and may limit oil intake, and that Russia could be forced to start cutting oil production. Treasuries chopped to the aforementioned data ahead of FOMC, but the short-end saw gains while the long-end was more or less flat. The US sold USD 13 billion of 20-Year Treasury notes, with the results signalling resilient demand, particularly from direct bidders. The Dollar sold off, to the benefit of G10 FX peers, while spot Gold hit another all-time-high and breached USD 3,700/oz, albeit briefly. Retail Sales were above expectations across the board in August, highlighting the resilient US consumer. Highlighting this, the headline rose 0.6% M/M (exp. 0.2%, prev. 0.6%), and ex-autos M/M lifted 0.7% (exp. 0.4%, prev. 0.4%), with both matching the top end of the forecast range. Ex-gas/autos jumped 0.7% from 0.3%, with retail control coming in at 0.7%, above the consensus 0.4% and prior 0.5%. Looking into the details, nonstore retailers (+2.0%), Clothing & clothing accessories stores (+1.0%), and Food services & drinking places (+0.7%) led the gains, while Furniture, Health, General merchandise, and Miscellaneous all declined. On the release, ING writes “We need to remember that these numbers are nominal dollar figures, so adjusting for inflation, the volume figures are up a more modest 0.2% M/M, but that isn’t bad and should further dampen any lingering thoughts that the Fed could cut rates 50bps on September 17th, and as such a 25bps cut remains ING’s call”. Elsewhere, Oil closed higher by 2% while Gold hit a new all-time closing high with a gain of 0.3%.
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