UPDATED: In Bullish Mood Expecting "Back-To-Normal" US Retail Sales Trend

FINAL UPDATE AFTER THE US EQUITY CASH MARKET CLOSE:
It' s ALL about bond yields ... as yields rise, so equities give up, and vice verse ... fascinating!

After a rather successful 30-year US Treasuries auction (profit-orientated central banks took almost 50%), equity markets (S&P500) were trying to break out to the UPSIDE the range (blue lines) since the beginning of June, see chart below, courtesy of StockCharts.com, here you can follow up-to-date ...

... but we failed to break the upside! Well, a minimum of a break below 920 for S&P500 would suggest a still healthy bearish notion.

UPDATE SHORTLY BEFORE US EQUITY CASH MARKET CLOSING:

Let's start with European equity market reaction, the German DAX index reversed the initial dip and closed near daily highs. Chart courtesy of Reuters.

Let' s move on with US retail sales data, here is the comment by BNP Paribas, and here by Danske Bank.

Steven Wieting at Citigroup, Global Markets, had a following commentary:

Retail sales in May rose 0.5%, with sales ex-autos also up 0.5%. The declines of April were revised up a bit, with sales overall and ex-autos down 0.2%. The level of sales in May was thus slightly higher than consensus expectations.

Gasoline prices rose above seasonal norms for the first time this year in May, with retail gasoline station receipts up 3.6% (seasonally adjusted). Ex-gasoline sales, total retail sales in the U.S. were up 0.2% in May (see figure 1). The data should reinforce forecasts that the CPI for May will rise 0.3% or 0.4%, with real retail sales up only slightly in the month.

In May, the components of retail sales that are excluded from core measures, gasoline, autos and building materials, saw gains. Auto dealer receipts rose 0.5% for the first increase since January. Sales at building materials, garden and supply
dealers rose 1.3% for the first increase (seasonally adjusted) since June 2008. So-called core retail sales, meanwhile, were flat following a 0.1% decline in April (though revised up slightly).

Core retail sales in May were 1.7% annualized below the first quarter average. Folding in services expenditures, price developments and a very slight rise in unit auto sales, real consumer spending appears on track to fall about 1% in 2Q 2009 following a 1.6% rise in 1Q 2009. Consumer spending has essentially idled this year. But domestic production (off 19% annualized in the first quarter) and imports have been crushed. Production and trade measures can rebound some to prevent inventories from falling, much less make them rise.

See the chart, courtesy of Citigroup, my adjustments with focus on " green shoots" story:

Societe Generale with Stephen Gallagher got to the point, confusing my brain, in the headline writing "Consumers regain momentum", but the chart title sounds like "Momentum fades after a Q1 bounce" ... well, the chart source was Global Insight, according to the note. So, the comment:

Consumer spending regains some momentum in May. Along upward revisions to earlier months, the May Retail Sales report implies flat consumer spending in Q2 after a 1.5% annualized gain in Q1. Returning momentum as suggested here implies a return to a 2.0%-2.5% pace in Q3. (or 1.2% average YTD).
Gas prices boosted Retail revenues in May, but pose a threat to consumer purchasing power. Gas prices continued to move higher in June. Current prices may not be a problem, but an ongoing rise would harm spending.

Well, you decide! My take can be seen in the Citi's chart ...

UPDATE 20:30 Latvian time: it' s not about any economic data today, it is about bond yields ...

UPDATE 15:55 Latvian time: Here is the original release ... the headline looks more or less in-line with consensus expectations, but equities expected more? Well, we had weekly jobless claims released at the same time, but also not as bad ...



ORIGINAL MESSAGE
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This is, what, according to DBS, I should expect from the US Retail Sales data today (I like the chart very much):

The retail sales report (May) is on tap today. Markets expect a grudging 0.5% (MoM, sa) rise in headline sales, barely enough to offset last month’s decline of 0.4%. “Risks” are to the upside, though, given the 7% rise in unit auto sales reported 7 days ago. The latter really ought to push headline retail sales growth to 1.5% or more. Beneath the autos (and building materials) lies the so-called “control group” within retail sales, used to help calculate the consumption figures reported in the GDP accounts. This series continues to grind north since hitting bottom in Dec08. It’s far from a "V-shaped” recovery but growing it is and, in so doing, is performing the task always assigned to consumption at the bottom of a cycle: to drag the rest of the economy, kicking and screaming perhaps, out of recession after it has fallen into one for some other reason (typically an investment bust, in this case, housing). Given its crucial role in the recovery process, investors need to keep their eye on consumption more than any other series. It’s final demand that matters and there’s nothing more final than consumption.

Last month BNP Paribas reported this ...

Is there "back-to-normal"?