Announced this morning, Retail Sales for May decreased -1.3%, a bigger drop than expected. Clothing & Accessories stores were strong during the month, while Building Materials and Motor Vehicles & Parts stores were among those that were weak. The Control Group, which excludes sales for food, autos, building materials, and gas stations, decreased -0.7% in May, also a larger drop than expected. Meanwhile, the Producer Price Index was up 0.8% in May and is up 6.6% on an annual basis, both more than estimates. The core rate, which excludes food and energy prices, was up 0.7% in May and is up 4.8% on an annual basis. Overall, weak retail sales in May, which were affected by stimulus payments that were in the system in April. At the same time, inflationary pressures remain at the producer level, continuing the questions of whether increases in particular parts of the economy (Used Car Prices, Airline Fares) will remain high as capacity returns in the months ahead. The comments following this week’s Federal Reserve meeting will be closely watched for when they will adjust their accommodative policy given the recent economic data points. In all, bond yields are slightly higher and equity futures are mixed as we head into the market open.
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