USD: Strong retail sales and Fed focus – TD Securities

TD Securities’ Global Strategy Team expects US Retail Sales for March to post strong gains, led by higher gasoline prices and solid control group spending. They see only a sideways move in auto sales and firm food services. Markets are also watching Fed Chair nominee Kevin Warsh’s confirmation hearing and ongoing Middle East developments for implications for US rates.

Retail strength and Warsh hearing

"Warsh's prepared remarks for Tuesday's nomination hearing were released, where Warsh defends Fed independence and leans somewhat hawkish on the inflation front. We expect him to remain noncommittal ahead of the Senate Banking Committee, with both rates and balance sheet policy in focus."

"In addition to Warsh's hearing, retail sales will be released in the morning, where we are expecting above-consensus prints for both headline and control group. However, markets will remain focused on the Middle East, with the negotiations in Pakistan beginning."

"We expect retail sales increased sharply in March at 1.7% m/m, largely due to higher gasoline prices (cons: 1.4%). Strong control group sales at 0.6%—also somewhat supported by core goods inflation—will also likely support the headline (cons: 0.2%). We look for only a sideways move in auto sales."

"Food services sales, the only services category in the report, were likely strong as well at 0.7%."

"Rates bear flattened on Monday as the Strait was closed again over the weekend, with equities only modestly lower in the session."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)