The period of high volatility in the markets continues, with traders increasingly concerned about the economic slowdown. The data on US consumer sentiment released on Friday only fueled this concern. The University of Michigan consumer sentiment index (preliminary) fell to 59.1 in May 2022, from 65.2 in April and below the forecast of 64.
Inflation is becoming an increasingly serious issue and the Fed is tightening its monetary policy. Although inflation in the US slowed to 8.3% in April, energy and food prices remained high, exacerbated by the Russia-Ukraine war.
Today a major macroeconomic data to keep an eye on is US retail sales, which are useful in understanding the health of US consumers. According to the US Census Bureau, April retail sales data was 0.9% month-over-month, from an upwardly revised 1.4% in March and in line with the market forecast. Year-over-year sales was 8.2%, following an upwardly revised 7.3% in March. Core retail sales, which excludes automobiles, was 0.6%, slightly stronger than the forecast of 0.4%. Food services and drinking places rose to 19.8% from April 2021, while gasoline stations were up 36.9%. Amid growing inflation and solid retail sales figures, the Fed is expected to maintain its plan to raise interest rates in the following meetings.