AntaresScorpius
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📉 When the monthly retail sales (MoM) figure in the United States changes from 0.5% to 0.3%, as was the case on September 16, 2025, it means that retail sales growth has slowed compared to the previous month. Here's what this could mean:
🧠 Economic interpretation
• Sign of slowing consumption: Retail sales are a key indicator of consumer spending, which accounts for about 70% of US GDP. A decline suggests that consumers are spending less.
• Impact on the dollar: A weaker-than-expected figure is generally considered negative for the dollar because it could prompt the Federal Reserve to be more cautious with any interest rate hikes.
• Effects on financial markets: Investors could interpret the figure as a sign of a weakening economy, leading to a sell-off in stock markets or increased demand for safe-haven assets such as gold or government bonds.
📊 Why it matters
• If the data is lower than expected, it can influence monetary policy decisions, inflation expectations, and investor confidence.
• If the data worsens but remains positive (such as from 0.5% to 0.3%), it means the economy is still growing, but at a slower pace.
What does this data mean for the Fed?
📊 For the Federal Reserve (Fed), retail sales data are crucial for assessing the health of the US economy, particularly the strength of domestic demand. Here's what they mean when they worsen, as in the case of a change from +0.5% to +0.3%:
🧭 Implications for the Fed
• A sign of slowing demand. Weaker retail sales growth may indicate that consumers are becoming more cautious, perhaps due to high interest rates, persistent inflation, or economic uncertainty. This may prompt the Fed to reevaluate the need to hold or raise rates.
• Pressure to Loosen Monetary Policy If spending slows significantly, the Fed may consider a rate cut to stimulate the economy. However, this also depends on other factors such as inflation and the labor market.
• Indicator of Consumer Resilience Even a positive but slowing figure (such as +0.3%) can be interpreted as a sign that the economy is still growing, but with less momentum. The Fed may decide to keep rates unchanged if it believes growth is still sustainable.
🧠 In Summary
The Fed doesn't just look at the figure itself, but contextualizes it with other indicators:
• If inflation is still high, even a slowdown in sales may not be enough to justify a rate cut.
• If the labor market weakens along with consumption, the Fed may act more quickly to stimulate the economy.
🔍 Here's what the CME Group's FedWatch Tool tells us about market expectations for the September 2025 Federal Reserve meeting:
📈 Current probabilities (according to FedWatch Tool)
• 82.5% probability that the Fed will cut interest rates by 25 basis points
• 17.5% probability that rates will remain unchanged
These percentages reflect market participants' expectations based on Fed Funds futures. Before the August 20 FOMC minutes were released, the probability of a cut was 100%, but it dropped to 83% after some Fed members expressed concerns about inflation.
🧠 What does all this mean?
• The Fed is divided: some members fear that inflation, especially protectionism-related inflation, could rebound in the fourth quarter. This makes them reluctant to cut rates, despite the slowdown in consumer spending.
• The market is still betting on a rate cut, but with less certainty than before. If the Fed doesn't cut, there could be a negative reaction in financial markets.
• By October 2025, a cumulative 50 basis point rate cut is projected at 52%, a sign that investors expect more accommodative policy in the coming months.
🧠 Economic interpretation
• Sign of slowing consumption: Retail sales are a key indicator of consumer spending, which accounts for about 70% of US GDP. A decline suggests that consumers are spending less.
• Impact on the dollar: A weaker-than-expected figure is generally considered negative for the dollar because it could prompt the Federal Reserve to be more cautious with any interest rate hikes.
• Effects on financial markets: Investors could interpret the figure as a sign of a weakening economy, leading to a sell-off in stock markets or increased demand for safe-haven assets such as gold or government bonds.
📊 Why it matters
• If the data is lower than expected, it can influence monetary policy decisions, inflation expectations, and investor confidence.
• If the data worsens but remains positive (such as from 0.5% to 0.3%), it means the economy is still growing, but at a slower pace.
What does this data mean for the Fed?
📊 For the Federal Reserve (Fed), retail sales data are crucial for assessing the health of the US economy, particularly the strength of domestic demand. Here's what they mean when they worsen, as in the case of a change from +0.5% to +0.3%:
🧭 Implications for the Fed
• A sign of slowing demand. Weaker retail sales growth may indicate that consumers are becoming more cautious, perhaps due to high interest rates, persistent inflation, or economic uncertainty. This may prompt the Fed to reevaluate the need to hold or raise rates.
• Pressure to Loosen Monetary Policy If spending slows significantly, the Fed may consider a rate cut to stimulate the economy. However, this also depends on other factors such as inflation and the labor market.
• Indicator of Consumer Resilience Even a positive but slowing figure (such as +0.3%) can be interpreted as a sign that the economy is still growing, but with less momentum. The Fed may decide to keep rates unchanged if it believes growth is still sustainable.
🧠 In Summary
The Fed doesn't just look at the figure itself, but contextualizes it with other indicators:
• If inflation is still high, even a slowdown in sales may not be enough to justify a rate cut.
• If the labor market weakens along with consumption, the Fed may act more quickly to stimulate the economy.
🔍 Here's what the CME Group's FedWatch Tool tells us about market expectations for the September 2025 Federal Reserve meeting:
📈 Current probabilities (according to FedWatch Tool)
• 82.5% probability that the Fed will cut interest rates by 25 basis points
• 17.5% probability that rates will remain unchanged
These percentages reflect market participants' expectations based on Fed Funds futures. Before the August 20 FOMC minutes were released, the probability of a cut was 100%, but it dropped to 83% after some Fed members expressed concerns about inflation.
🧠 What does all this mean?
• The Fed is divided: some members fear that inflation, especially protectionism-related inflation, could rebound in the fourth quarter. This makes them reluctant to cut rates, despite the slowdown in consumer spending.
• The market is still betting on a rate cut, but with less certainty than before. If the Fed doesn't cut, there could be a negative reaction in financial markets.
• By October 2025, a cumulative 50 basis point rate cut is projected at 52%, a sign that investors expect more accommodative policy in the coming months.
